Audit committee independence and financial expertise and earnings management: evidence from China

Radwan Hussien Alkebsee, Gaoliang Tian, Alexandros Garefalakis, Andreas Koutoupis and Panagiotis Kyriakogkonas

International Journal of Business Governance and Ethics, 2022, vol. 16, issue 2, 176-194

Abstract: This paper investigates the effect of the audit committee's independence and financial expertise on financial reporting quality. In particular, we investigate the relationship between the audit committee's independence and financial expertise and accrual earnings management. Using a sample of Chinese public firms over the period of 2010 to 2017, the findings show a negative association between the independence of the audit committee and accrual earnings management. This finding suggests that a high proportion of independent directors on the audit committee enhance the monitoring role of the audit committee over earnings quality. We also, find no evidence regarding the effect of the audit committee's financial expertise on accrual earnings management. Our findings are robust to the potential endogeneity problem. This study has important implications for policymakers and other stakeholders.

Keywords: earnings management; audit committee independence; audit committee financial expertise; China. (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbget:v:16:y:2022:i:2:p:176-194

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