The audit committee and earnings management: new evidence from the H-share listed companies on the exchange stock of Hong Kong

Allen Jiang and Bessie Jia

Applied Economics, 2024, vol. 56, issue 56, 7422-7436

Abstract: This paper selects H-share companies listed on the Stock Exchange of Hong Kong from 2008 to 2018 as research samples and designs an OLS regression model to empirically test the impact of the quality of the audit committee measured by the four aspects of the characteristics of the audit committee on the earnings management level of the company based on the Jones model. It concludes that when the overall quality of the company’s audit committee is higher, the company’s earnings management level is lower. This conclusion strongly proves that the establishment and effective operation of an audit committee plays an important role in improving corporate governance and restraining earnings manipulation by the management team and the governance role. This paper provides empirical evidence to help corporation leaders and stakeholders make better decisions on management and investment on H-share listed companies. The innovation and contributions and to audit and earnings management literature and implications and innovation for regulators and investors are also discussed.

Date: 2024
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DOI: 10.1080/00036846.2023.2283776

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