Internal monitoring mechanisms and earnings quality: Empirical evidence from Malaysia

Earnings quality reflects the integrity and quality of financial reporting which minimizes the information asymmetry and agency conflicts among management, owners, and majority and minority shareholders. The issue of earnings quality has become a concern, especially in respect of corporate governance as an internal monitoring mechanism to ensure the financial reporting quality. The objective of the study is to examine the relationship between internal monitoring mechanisms, namely, board of directors, audit committee, internal audit function, and earnings quality based on agency theory and resource dependence theory. Furthermore, this study examines the moderating effect of audit committee between the internal audit function and earnings quality. The sample of the study is 2,036 firm-year observations on the Main Market of Bursa Malaysia for the period of 2009 to 2012. Two discretionary accruals models were used to measure earnings quality. This study reveals that board size, audit committee financial expertise, investment in internal audit function, and outsourcing of internal audit function increase the quality of earnings. However, board independence, board financial expertise, audit committee’s chairman audit partner, audit committee meeting, and audit committee score reduce earnings quality. The hierarchical regression results show that audit committee size, independence, meetings, and audit committee score moderate the relationship between investment in the internal audit function and earnings quality. In addition, audit committee independence, financial expertise, meetings, and audit committee score moderate the relationship between sourcing arrangements of the internal audit function and earnings quality. The results of this study have implications to investors, regulators, and market participants. Policy makers might use the findings regarding earnings quality to recognize the important roles played by both the internal audit and audit committee in enhancing the earnings quality in Malaysian companies

ANALISIS PENGARUH KARAKTERISTIK KOMITE AUDIT TERHADAP KUALITAS LABA DAN MANAJEMEN LABA DI BURSA EFEK INDONESIA

This study aims to examine the relationship between specific characteristics of the auditcommittee and earnings quality of earnings management in companie in Indonesia. Audit committee characteristics are used in this study include the size of the membership of the audit committee, audit committee independence, and the frequency of meetings of audit committee members. The research was carried out by the method of documentation. Data collection and documentation is done by classification category written data related tothe research problem. Variables used in this study were dependent variables include earnings management,earnings quality, and the independent variable is the size of the audit committee, audit committee independence and audit committee meeting frequency. The results proved that the simultaneous audit committee size factor, the independent auditcommittee and audit committee meeting to give effect to earnings management, but notsignificantly rerhadao earnings quality

ANALISIS PENGARUH KARAKTERISTIK KOMITE AUDIT DAN ADOPSI IFRS TERHADAP KUALITAS LABA (Studi Kasus Pada Perusahaan Manufaktur Yang Terdaftar Di BEI Tahun 2010- 2012)V

The objective of this research is to examine the characteristics of the audit committee (the size of the membership of the audit committee, the number of audit committee meetings, and audit committee independence) and adoption of IFRS-based accounting standards toward companies earnings quality. This research used samples from manufacturing companies that listed on Indonesia Stock Exchange (IDX) during 2010-2012. Based on purposive sampling technique, it got 45 companies as research samples, so as long as 3 years observation there were 135 annual reports were analyzed. The method of analysis of this research was multiple regression. The results of this research showed that the size of the membership of the audit committee has significant influence to earnings quality; the number of audit committee meetings doesn’t have significant influence to earnings quality; audit committee independence has significant influence to earnings quality; meanwhile adoption of IFRS-based accounting standards doesn’t have significant influence to earnings quality

PENGARUH KARAKTERISTIK KOMITE AUDIT TERHADAP KUALITAS LABA

The aim of the research is to investigate the influence of audit committee characteristics on earnings quality. Independent variables on this research included size of audit committee, independence of audit committee, number of meetings of audit committee, and tenure of audit committee. While the dependent variable is earnings quality. This research also used 2 control variables included company size and company leverage. This research is a quantitative research using secondary data such as data in the annual report which are manually taken through official site of Bursa Efek Indonesia. Population of this research is the whole 136 manufacturing companies listed on Bursa Efek Indonesia constanly or successively along 2014 – 2016. Then 74 companies are selected to match the criteria. This research uses linear regression analysis method for hypothesis testing. The results showed that audit committee size and audit committee independence are have no effect on earnings quality. Number of meetings has positive effect on earnings quality, which frequently meetings can solve companies problems fastly. While audit committee tenure has negative effect on earnings quality, which someone who officiate in long time as a audit committee on a certain company knowing some opportunities in a company to doing earnings management practices

PENGARUH KARAKTERISTIK KOMITE AUDIT DAN KUALITAS AUDITOR EKSTERNAL TERHADAP MANAJEMEN LABA

This research aims to analyze the effect of audit committee characteristics and external auditor quality on earnings management. The audit committee characteristics analyzed in this research are audit committee size, audit committee expertise, the number of meetings of the audit committee, and the tenure of audit committee chairman. The audit committee characteristics and external auditor quality are the independent variables in this research and earnings managements as the dependent variable. The data in this research were obtained from secondary data from annual report and financial report published by public companies. The companies used as the sample in this research are non-financial companies listed in Indonesia Stock Exchange (IDX) on 2013-2015. This research uses a sample of 147 public companies with the total observation is 441 observations. This research uses the OLS statistic regression to analyze the effect of independent variables on the dependent variable. These research findings show that audit committee size, the number of meetings of the audit committee, and the tenure of audit committee chairman have a negative significant effect on earnings management. Meanwhile, external auditor quality has a negative insignificant effect on earnings management and audit committee expertise has a positive insignificant effect on earnings management

PENGARUH MEKANISME CORPORATE GOVERNANCE TERHADAP NILAI PERUSAHAAN DENGAN KUALITAS LABA SEBAGAI VARIABEL INTERVENING PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2004-2007

This research to examine the influence of corporate governance mechanism on the firm value with earnings quality as variable intervening. Corporate governance mechanism used four variables that are managerial ownership, institusional ownership, board of commissioner composition and audit committee existence. Earnings quality was measured with Earnings Response Coefficient (ERC) and firm value was measured with Price Book Value (PBV). This research used empirical data from Indonesian Stock Exchange with 28 manufacturing company as sample. By using multiple regression analysis as the research method, the results shown that earnings quality is measured by ERC. Audit committee existence and managerial ownership influence earnings quality. The other variables did not influence earnings quality, that are institusional ownership and board of commissioner composition. Managerial ownership and institusional ownership influence firm value. Board of commissioner composition and audit committee existence did not influence firm value. Keywords: corporate governance mechanism, managerial ownership, institusional ownership, board of commissioner composition, audit committee existence, earnings quality, Earnings Response Coefficient, firm value, Price Book Valu

Analisis Dampak Kualitas Komite Audit Terhadap Kualitas Laporan Keuangan Perusahaan Dengan Kualitas Audit Sebagai Variabel Moderasi

This research is aimed to examine the impact of audit committee quality measured by audit committee expertise, audit committee size, and number of meeting on the quality of company financial reporting with an audit quality as a moderating variable. This research uses three measures for financial reporting quality which are persistency, predictability, and conservatism. The results of this research show that audit committee quality affects financial reporting quality. Audit committee financial literacy significantly increase persistency and predictability of earnings. Size of audit committee positively affects earnings persistency and negatively affects earnings predictability and conservatism. Number of audit committee meeting also significantly increase persistency, predictability of earnings, and conservatism. We find a mixed evidence on the moderating role of audit quality in the the relationship between audit committee quality and financial reporting quality.Keywords: financial reporting quality, persistency, predictability, conservatism, audit committee---Penelitian ini bertujuan untuk meneliti pengaruh kualitas komite audit yang diukur dengan keahlian komite audit, ukuran komite audit, dan jumlah rapat terhadap kualitas pelaporan keuangan Perusahaan dengan kualitas audit sebagai variabel moderasi. Penelitian ini menggunakan tiga ukuran kualitas pelaporan keuangan yaitu persistensi, prediktabilitas, dan konservatisme. Hasil penelitian menunjukkan bahwa kualitas komite audit berpengaruh terhadap kualitas laporan keuangan. Keahlian komite audit di bidang keuangan secara signifikan meningkatkan persistensi dan prediktabilitas dari laba. Ukuran komite audit secara signifikan berpengaruh positif terhadap persistensi dan berpengaruh negatif terhadap prediktabilitas laba dan konservatisme. Jumlah rapat anggota komite audit juga secara signifikan berpengaruh positif terhadap persistensi, prediktabilitas laba, dan konservatisme. Penelitian ini menemukan bukti yang berbaur atas efek moderasi dari kualitas audit terhadap hubungan antara kualitas komite audit dan kualitas pelaporan keuangan

PENGARUH KARAKTERISTIK KOMITE AUDIT DAN KUALITAS AUDIT TERHADAP MANAJEMEN LABA

This study aims to examine the effect of audit committee characteristics and audit quality on earnings management. These characteristics are size of the audit committee, competency of audit committee, and audit committee activities, while the audit quality is proxied as: auditor reputation (KAP big- 4 and KAP Non big- 4), auditor is industry specialization. The number of samples were determined using the purposive sampling method, obtained a total sample of 109 companies. The multiple linear regression is used to test the hipotheses. The results of this study show that competency of audit committee and audit committee activities affect negative significantly on earnings management