The Impact of Audit Quality and Female Audit Committee Characteristics on Earnings Management: Evidence from the UK

Naila Amara, Saad Bourouis, Sajead Mowafaq Alshdaifat, Houssam Bouzgarrou and Hamzeh Al Amosh ()
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Naila Amara: Department of Accounting and Finance at IHEC, University of Sousse, Sousse 4056, Tunisia
Saad Bourouis: Department of Accounting and Finance at IHEC, University of Sousse, Sousse 4056, Tunisia
Sajead Mowafaq Alshdaifat: Financial and Accounting Sciences Department, Faculty of Business, Middle East University, Amman 11831, Jordan
Houssam Bouzgarrou: Department of Accounting and Finance at ISFF, University of Sousse, Sousse 4054, Tunisia
Hamzeh Al Amosh: Department of Financial Intelligence, University of South Africa, Pretoria 0002, South Africa

JRFM, 2025, vol. 18, issue 3, 1-20

Abstract: This study explores the impact of audit quality and the proportion of women on an audit committee on earnings management. Moreover, we examined how age diversity and the presence of non-foreign women on audit committees influence earnings management. Our study utilizes data from 165 UK-based listed companies between 2011 and 2021. A combination of static and dynamic analysis was used to empirically reveal our results. The results show a negative and significant relationship between audit quality and earnings management, as per the Kothari model. The presence of a female audit committee does not affect earnings management. However, when we control for demographic variables like age and nationality, we found that non-foreign female members of the audit committee reduced earnings management, while age diversity among female members had no effect. Additional analysis using the Dechow model revealed that both the presence of a female audit committee and their nationality affected earnings management. Our findings contribute to ongoing discussions on corporate governance by providing evidence that female audit committees and audit quality influence earnings management in UK-listed companies. This study is one of the few that examines demographic attributes (e.g., nationality or age).

Keywords: accrual earnings management; female audit committee; audit quality; agency theory; UK (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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