Journal Screenshot

International Journal of Academic Research in Business and Social Sciences

Open Access Journal

ISSN: 2222-6990

An Investigation of Audit Committee Characteristics on Audit Quality towards the Changes on Real Earnings Management: Evidence from Jordan

Mohammad Hussein Rahahleh, Ahmad Husni Bin Hamzah

http://dx.doi.org/10.6007/IJARBSS/v9-i10/6488

Open access

Although, the characteristics of an audit committee were always considered as a protective tool for the stakeholder's interest in the capital market yet the manipulation of the Real Earnings Management activities also created a major threat among the stakeholders whenever the audit committee was engaged with the top management of the business organizations. This paper is aimed to reveal the mediating effect of audit quality on the relationship between the characteristics of an audit committee and real earnings management. To this, the previous literature related to the characteristics of an audit committee regarding audit committee, audit quality, and real earnings management was reviewed and found that studies on the characteristics of an audit committee, audit quality, and real earnings management presented miscellaneous results. Consequently, the previous studies permit further research to find the mediating effect.

Abad, D., Cutillas-Gomariz, M. F., Sánchez-Ballesta, J. P., & Yagüe, J. (2018). Real earnings management and information asymmetry in the equity market. European Accounting Review, 27(2), 209-235.?
Abbott, L. J., Park, Y. and Parker, S. (2000). The effects of audit committee activity and independence on corporate fraud, Managerial Finance, 26 (11), 55–67.
Al-dhamari, R., Almagdoub, A., & Al-gamrh, B. (2018). Are audit committee characteristics important to the internal audit budget in Malaysian firms? Contaduria y Administracion, 63(3), 1–23.
Alves, S. (2013). The impact of audit committee existence and external audit on earnings management: Evidence from Portugal. Journal of Financial Reporting & Accounting, 11(2), 143-165.?
Arens, A. A., Elder, R. J., & Mark, B. (2012). Auditing and assurance services: an integrated approach. Boston: Prentice Hall.
Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social the moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182.
Basiruddin, R. (2011). The relationship between governance practices, audit quality and earnings management: UK evidence(Doctoral dissertation, Durham University).?
Baxter, P., & Cotter, J. (2009). Audit committees and earnings quality. Accounting & Finance, 49(2), 267-290.?
Berle, A. A., & Means, G. C. (1932). The modern corporation and private property. Piscataway, NJ: Transaction Publishers.
Brown, P., Beekes, W., & Verhoeven, P. (2011). Corporate governance, accounting and finance: A review. Accounting & finance, 51(1), 96-172.?
Carcello, J. V., Hermanson, D. R., Neal, T. L., & Riley, R. A. (2002). Board characteristics and audit fees. Contemporary Accounting Research, 19(3), 365–384.
Chtourou, S. M., Bedard, J., &Courteau, L. (2001). Corporate governance and earnings management. University of Laval, Quebec, Canada.?
Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management Review, 22(1), 20–47.
DeAngelo, L. E. (1981). Auditor size and audit quality. Journal of accounting and economics, 3(3), 183-199.?
Dechow, P. M., Hutton, A. P., Kim, J. H., & Sloan, R. G. (2012). Detecting earnings management: A new approach. Journal of Accounting Research,50(2), 275-334.
Dedman, E. (2004). Discussion of reactions of the London stock exchange to company trading statement announcements. Journal of Business Finance and Accounting, 31(1–2), 37–47.
DeFond, M., & Zhang, J. (2014). A review of archival auditing research. Journal of Accounting and Economics, 58(2–3), 275–326.
Dhaliwal, D., Naiker, V., and Navissi, F. (2010). The Association Between Accruals Quality and the Characteristics of Accounting Experts and Mix of Expertise on Audit Committees, Contemporary Accounting Research, 27(3), 787–827.
Dobija, D. (2015). Exploring audit committee practices: oversight of financial reporting and external auditors in Poland. Journal of Management & Governance, 19(1), 113-143.?
Fama, E. F. and Jensen, M. C. (1983). Separation of ownership and control, Journal of Law and Economics, 26(2), 301–325.
Gaynor, L. M., Kelton, A. S., Mercer, M., & Yohn, T. L. (2016). Understanding the relation between financial reporting quality and audit quality. Auditing: A Journal of Practice & Theory, 35(4), 1-22.?
Goodwin-Stewart, J., & Kent, P. (2006). Relation between external audit fees, audit committee characteristics and internal audit. Accounting and Finance, 46, 387–404.
Gunny, K. (2010). The relation between earnings management using real activities manipulation and future performance: Evidence from meeting earnings benchmarks. Contemporary Accounting Research, 27(3), 855-888.
Habbash, M. (2010). The effectiveness of corporate governance and external audit on constraining earnings management practice in the UK (Doctoral dissertation, Durham Univers

In-Text Citation: (Rahahleh & Hamzah, 2019)
To Cite this Article: Rahahleh, M. H., & Hamzah, A. H. Bin. (2019). An Investigation of Audit Committee Characteristics on Audit Quality towards the Changes on Real Earnings Management: Evidence from Jordan. International Journal of Academic Research in Business and Social Sciencesnternaational, 9(10), 242–252.