Do the educational profile, gender, and professional experience of audit committee financial experts improve financial reporting quality?

Bilal, Bilal; Komal, Bushra; Ezeani, Ernest; Usman, Muhammad; Kwabi, Frank; Ye, Chengang

Abstract

Going beyond the mere presence of the audit committee financial experts (ACFEs) within the audit committee, we examine whether the educational profile, gender, and professional experience of ACFEs reduces the extent of earnings management. Using a sample of Chinese listed companies, we find evidence suggesting that ACFEs with postgraduate qualifications and other professional certifications mitigate earnings management. Female ACFEs with postgraduate qualifications are more effective in mitigating earnings management than their male counterparts. Also, the professional experience of ACFEs helps them reduce the extent of earnings management. Results are more pronounced in the case of female ACFEs with more professional experience. In addition, we found that ACFEs working in privately-owned Chinese firms better mitigate earnings management compared to those in state-owned Chinese firms. Overall, our results remain robust after controlling for potential endogeneity problems and using alternative earnings management proxies. Our study provides implications for regulators about necessary policy reforms regarding audit committee composition and recommends that companies appoint female ACFEs in China.

Citation

Bilal, B., Komal, B., Ezeani, E., Usman, M., Kwabi, F., & Ye, C. (2023). Do the educational profile, gender, and professional experience of audit committee financial experts improve financial reporting quality?. Journal of International Accounting, Auditing and Taxation, 53, Article 100580. https://doi.org/10.1016/j.intaccaudtax.2023.100580

• Journal Article Type: Article
• Acceptance Date: Sep 16, 2023
• Online Publication Date: Sep 20, 2023
• Publication Date: 2023-12
• Deposit Date: Sep 26, 2023
• Publicly Available Date: Sep 27, 2023
• Journal: Journal of International Accounting, Auditing and Taxation
• Print ISSN: 1061-9518
• Electronic ISSN: 1879-1603
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 53
• Article Number: 100580
• DOI: https://doi.org/10.1016/j.intaccaudtax.2023.100580
• Public URL: https://durham-repository.worktribe.com/output/1748426