Audit Committee Attributes, Financial Distress and the Quality of Financial Reporting in Malaysia

40 Pages Posted: 5 Nov 2009

See all articles by Noor Marini Haji-Abdullah

Noor Marini Haji-Abdullah

Universiti Teknologi MARA (UiTM)

Wan Nordin Wan-Hussin

Universiti Utara Malaysia - College of Business

Date Written: November 4, 2009

Abstract

Audit committee effectiveness is one of the significant themes in corporate governance debates. We contribute to the debate by examining empirically whether audit committees imbued with the prime features are associated with reliable financial reporting in Malaysia. By using a more direct measure of financial reporting quality, this study is one of the few studies that overcome the imprecision inherent in the abnormal accruals/earnings management. The evidence suggests that the desirable characteristics which the policy makers believe would enhance the effectiveness of the audit committee in carrying out its financial oversight responsibilities do not seem to yield the intended consequence. We find an association between financial distress and financial reporting quality, consistent with Rosner (2003) and Garcia-Lara, Garcia-Osma, & Neophytou (2009). This reinforces the importance of including the distress variable in future corporate transparency studies.

Keywords: Audit committee, financial reporting quality, Malaysia

JEL Classification: G32

Suggested Citation

Haji-Abdullah, Noor Marini and Wan-Hussin, Wan Nordin, Audit Committee Attributes, Financial Distress and the Quality of Financial Reporting in Malaysia (November 4, 2009). Available at SSRN: https://ssrn.com/abstract=1500134 or http://dx.doi.org/10.2139/ssrn.1500134

Noor Marini Haji-Abdullah

Universiti Teknologi MARA (UiTM) ( email )

40450 Shah Alam
Johor
Dungun, Selangor 23000
Malaysia

Wan Nordin Wan-Hussin (Contact Author)

Universiti Utara Malaysia - College of Business ( email )

Sintok, Kedah Darul Aman 06010
Malaysia
+604-7003939 (Phone)
+604-7005762 (Fax)

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