Article Sidebar

Download
View Article
Statistic
Read Counter : 513 Download : 372

Downloads

Download data is not yet available.

Main Article Content

Abstract

Audit committees and external audits have a very important role for financial reporting and the tendency of corporate managers to manipulate earnings. Frequency is a key factor in reducing conflicts of interest and opportunistic behavior from managers. This study aims to examine the effect of the audit committee's financial expertise on earnings management with external auditors as moderation. In this study, there were 1,966 company data listed on the Indonesia Stock Exchange in 2016-2019. Earnings management variables, audit committee financial expertise, and external audit were analyzed using multiple linear regression models. The results showed that the financial expertise of the audit committee had a significant positive effect on earnings management. Audit committee expertise moderated by external audit has a negative and significant effect on earnings management.

Keywords

Audit Committee Discretionary Accruals Earnings Management External Auditors Financial expertise

Article Details

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

How to Cite
Aulia, D. Y. (2021). Impact of Audit Committee Expertise on Earnings Management and External Auditor Moderation. Atestasi : Jurnal Ilmiah Akuntansi, 4(2), 200–213. https://doi.org/10.57178/atestasi.v4i2.102
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Agustia, Y. P., & Suryani, E. (2018). Pengaruh Ukuran Perusahaan, Umur Perusahaan, Leverage, Dan Profitabilitas Terhadap Manajemen Laba (Studi Pada Perusahaan Pertambangan yang Terdaftar di Bursa Efek Indonesia Periode 2014-2016). Jurnal ASET (Akuntansi Riset), 10(1), 71–82. https://doi.org/10.17509/jaset.v10i1.12571
  2. Al-Rassas, A. H., & Kamardin, H. (2015). Internal and External Audit Attributes, Audit Committee Characteristics, Ownership Concentration and Earnings Quality: Evidence from Malaysia. Mediterranean Journal of Social Sciences, 6(3), 458–470. https://doi.org/10.5901/mjss.2015.v6n3p458
  3. Al-Thuneibat, A. A., Al Issa, R. T. I., & Ata Baker, R. A. (2011). Do audit tenure and firm size contribute to audit quality?: Empirical evidence from Jordan. Managerial Auditing Journal, 26(4), 317–334. https://doi.org/10.1108/02686901111124648
  4. Ali, U., Noor, M., Khurshid, M. K., & Mahmood, A. (2015). Impact of Firm Size on Earnings Management: A Study of Textile Sector of Pakistan. SSRN Electronic Journal, 7(28), 47–56. https://doi.org/10.2139/ssrn.2698317
  5. Alves, S. (2013). The impact of audit committee existence and external audit on earnings management: Evidence from Portugal. Journal of Financial Reporting & Accounting.
  6. Alzeban, A. (2018). CEO involvement in selecting cae, internal audit competency and independence, and financial reporting quality. Journal of Business Economics and Management, 19(3), 456–473. https://doi.org/10.3846/jbem.2018.6264
  7. Arens, A. A., Elder, R. J., & Mark, B. (2012). Auditing and assurance services: an integrated approach.
  8. Badolato, P. G., Donelson, D. C., & Ege, M. (2014). udit committee financial expertise and earnings management: The role of status. Journal of Accounting and Economics, 58(2–3), 208–230.
  9. Ball, R., & Brown, P. (1968). An empirical evaluation of accounting income numbers. Journal of Accounting Research, 159–178.
  10. Baxter, P., & Cotter, J. (2009). Audit committees and earnings quality. Accounting and Finance, 49(2), 267–290. https://doi.org/10.1111/j.1467-629X.2008.00290.x
  11. Becker, C. L., Defond, M. L., & California, S. (1998). The Effect of Audit Quality on Earnings Management *. Contemporary Accounting Research, 15(1), 1–24.
  12. Bédard, J., Chtourou, S. M., & Courteau, L. (2004). The effect of audit committee expertise, independence, and activity on aggressive earnings management. Auditing, 23(2), 13–35. https://doi.org/10.2308/aud.2004.23.2.13
  13. Benedickson, J., Muldoon, J., Liguori, E., & E.Davis, P. (2016). Agency theory: the times, th are a-changin. Management Decision, 54(1), 174–193.
  14. Berger, P. G., Minnis, M., & Sutherland, A. (2017). Commercial lending concentration and bank expertise: Evidence from borrower financial statements. Journal of Accounting and Economics, 64(2–3), 253–277. https://doi.org/10.1016/j.jacceco.2017.06.005
  15. Carcello, J. V., Hollingsworth, C. W., Klein, A., & Neal, T. L. (2006). Audit committee financial expertise, competing corporate governance mechanisms, and earnings management. Competing Corporate Governance Mechanisms, and Earnings Management.
  16. Carcello, Joseph V., & Nagy, A. L. (2004). Client size, auditor specialization and fraudulent financial reporting. Managerial Auditing Journal, 19(5), 651–668. https://doi.org/10.1108/02686900410537775
  17. Cespa, G. (2008). Information sales and insider trading with long-lived information. Journal of Finance, 63(2), 639–672. https://doi.org/10.1111/j.1540-6261.2008.01327.x
  18. Chan, P., Ezzamel, M., & Gwilliam, D. (1993). Determinants of audit fees for quoted UK companies. Journal of Business Finance & Accounting, 20(6), 765–786.
  19. Choi, J.-H., Jeon, K.-A., & Park, J.-I. (2004). The role of audit committees in decreasing earnings management : Korean evidence Kyu-An Jeon Jong-Il Park. International Journal of Accounting, Auditing and Performance Evaluation, 1(1), 37–60.
  20. DeAngelo, L. E. (1981). Auditor size and audit quality. Journal of Accounting and Economics, 3(3), 183–199. https://doi.org/10.21608/ejchem.2010.1261
  21. Dhaliwal, D. S., Naiker, V., & Navissi, F. (2011). 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. https://doi.org/10.2139/ssrn.1548766
  22. Dwiharyadi, A. (2017). Pengaruh keahlian akuntansi dan keuangan komite audit dan dewan komisaris terhadap manajemen laba (The Impact of Accounting and Finance Expertise of Audit Committee and Board of Commissioner on Earnings Management). Jurnal Akuntansi Dan Keuangan Indonesia, 14(1), 75–93. http://jaki.ui.ac.id/index.php/home/article/view/646
  23. Eilifsen, A., & Messier, W. F. (2015). Materiality guidance of the major public accounting firms. Auditing: A Journal of Practice & Theory, 34(2), 3–26. https://doi.org/10.2308/ajpt-50882
  24. Fischer, M., & Rosenzweig, K. (1995). Attitudes of students and accounting practitioners concerning the ethical acceptability of earnings management Attitudes of Students and Accounting Practitioners Concerning the Ethical. Journal of Business Ethics, 14, 433–444.
  25. Fung, B. (2014). The Demand and Need for Transparency and Disclosure in Corporate Governance. Universal Journal of Management, 2(2), 72–80. https://doi.org/10.13189/ujm.2014.020203
  26. García‐Sánchez, I., & Noguera‐Gámez., L. (2017). Integrated Reporting and Stakeholder Engagement: The Effect on Information Asymmetry. Corporate Social Responsibility and Environmental Management, 24(5), 395–413. https://doi.org/10.1002/csr.1415
  27. Gendron, Y., & Be, J. (2006). On the constitution of audit committee effectiveness. Accounting, Organizations and Society, 31(2), 211–239. https://doi.org/10.1016/j.aos.2005.03.002
  28. Ghozali, I. (2018). Aplikasi Analisis Multivariate Dengan Program IBM SPSS 25-Edisi 9. Badan Penerbit Universitas Diponegoro.
  29. Healy, P. M., & Wahlen, J. M. (2005). A Review of the Earnings Management Literature and its Implications for Standard Setting. SSRN Electronic Journal, November. https://doi.org/10.2139/ssrn.156445
  30. Inaam, Z., & Khamoussi, H. (2016). Audit committee effectiveness, audit quality and earnings management: a meta-analysis. International Journal of Law and Management, 58(2), 179–196. https://doi.org/10.1108/IJLMA-01-2015-0006
  31. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.2139/ssrn.94043
  32. Johl, S., Jubb, C. A., & Houghton, K. A. (2007). Earnings management and the audit opinion: Evidence from Malaysia. Managerial Auditing Journal, 22(7), 688–715. https://doi.org/10.1108/02686900710772591
  33. Joshi, P. L., & Wakil, A. (2004). A study of the audit committees’ functioning in Bahrain: Empirical findings. Managerial Auditing Journal, 19(7), 832–858. https://doi.org/10.1108/02686900410549394
  34. Karim, K., Robin, A., & Suh, S. (2015). Board Structure and Audit Committee Monitoring : Effects of Audit Committee Monitoring Incentives and Board Entrenchment on Audit Fees. Journal of Accounting, Auditing & Finance, 31(2), 249–276. https://doi.org/10.1177/0148558X15583412
  35. Keuangan, O. J. (2017). Peraturan Otoritas Jasa Keuangan Nomor 55 /Pojk.05/2017 Tentang Laporan Berkala Perusahaan Perasuransian. 1–17.
  36. Kieso, D. E., Weygandt, J. J., Warfield, T. D., Wiecek, I. M., & McConomy, B. J. (1996). Intermediate Accounting, Volume 2. In 2019. John Wiley & Sons.
  37. Klein, A. (2002). Audit Committee, Board of Director Characteristics, and Earnings Management. Journal of Accounting and Economics, 33(3), 375–400.
  38. Komisioner, D., & Jasa, O. (2015). Peraturan Otoritas Jasa Keuangan Nomor 55 /Pojk.04/2015 Tentang Pembentukan Dan Pedoman Pelaksanaan Kerja Komite Audit.
  39. Kothari, S. P., Leone, A., & Wasley, C. (2005). Performance Matched Accruals Measures. Journal of Accounting and Economics, 39, 163–197. http://www.sciencedirect.com/science/article/pii/S0165410104000849
  40. Krishnan, J., & Review, T. A. (2005). Audit Committee Quality and Internal Control : An Empirical Analysis.
  41. Lannai, D., & Muslim, M. (2021). Causality of Fraud Detection. Jurnal Akuntansi, 25(1), 19-33.
  42. Lin, J. W., & Hwang, M. I. (2010). Audit Quality, Corporate Governance, and Earnings Management: A Meta-Analysis. International Journal of Auditing, 14(1), 57–77. https://doi.org/10.1111/j.1099-1123.2009.00403.x
  43. Modal, B. P. P. (2004). eraturan Bapepam IX. I. 5 (Lampiran Keputusan Ketua Bapepam Nomor Kep 29/PM/2004 tanggal 24 Maret 2004). In Pembentukan dan Pedoman Pelaksanaan Kerja Komite Audit.
  44. Moroney, R., & Trotman, K. T. (2016). Differences in auditors’ materiality assessments when auditing financial statements and sustainability reports. Contemporary Accounting Research, 33(2), 551–575.
  45. Muslim, M., Ahmad, H., & Rahim, S. (2019). The effect of emotional, spiritual and intellectual intelligence on auditor professionalism at the inspectorate of South Sulawesi Province. The Indonesian Accounting Review, 9(1), 73-84.
  46. Porta, L., Lopez-de-silanes, F., & Shleifer, A. (2000). Investor protection and corporate governance. Journal of Financial Economics, 58(1–2), 3–27. https://doi.org/10.1016/S0304-405X(00)00065-9
  47. Robu, M. A., & Robu, I. B. (2015). The Influence of the Audit Report on the Relevance of Accounting Information Reported by Listed Romanian Companies. Procedia Economics and Finance, 20(15), 562–570. https://doi.org/10.1016/s2212-5671(15)00109-4
  48. Rusmin, R. (2005). Auditor quality and earnings management : Singaporean evidence. Managerial Auditing Journal., 25(7), 618–638. https://doi.org/10.1108/02686901011061324
  49. Shirzad, A., Mohammadi, S., & Haghighi, R. (2015). Effect of Financial Performance on Earnings Management in the Drug Distribution Industry. Journal of Industrial Distribution & Business, 6(4), 23–26. https://doi.org/10.13106/ijidb
  50. Sun, J., Lan, G., & Liu, G. (2014). Independent audit committee characteristics and real earnings management. Managerial Auditing Journal, 29(2), 153–172. https://doi.org/10.1108/MAJ-05-2013-0865
  51. Susanto, Y. K., & Pradipta., A. (2016). Corporate governance and real earnings management. Nternational Journal of Business, Economics and Law, 9(1), 17–23.
  52. Tahinakis, P., & Samarinas, M. (2016). The incremental information content of audit opinion. Journal of Applied Accounting Research., 17(2).
  53. Xie, B., Davidson, W. N., & Dadalt, P. J. (2003). Earnings management and corporate governance : the role of the board and the audit committee. Journal of Corporate Finance, 9(3), 295–316.