The Association Between Accruals Quality and the Characteristics of Accounting Experts and Mix of Expertise on Audit Committees

55 Pages Posted: 6 Feb 2010 Last revised: 8 Feb 2010

See all articles by Dan S. Dhaliwal

Dan S. Dhaliwal

University of Arizona - Department of Accounting (deceased)

Vic Naiker

University of Melbourne - Faculty of Business and Economics

Farshid Navissi

Monash University

Date Written: February 5, 2010

Abstract

Prior literature suggests a positive relationship between financial reporting quality and the presence of accounting experts on audit committees. This study investigates the association between accruals quality and the characteristics of accounting experts and mix of accounting and non-accounting (finance and supervisory) expertise on audit committees. Using post-SOX data, our results indicate a positive relationship between accruals quality and audit committee accounting experts who are independent, hold fewer multiple directorships, and have lower tenure in their firms. Furthermore, the results suggest that the most positive effect of accounting expertise on accruals quality is achieved when accounting expertise is combined with finance expertise in audit committees. Supervisory expertise, on the other hand, seems to have no incremental impact on the effectiveness of audit committees that include accounting and finance expertise. The findings highlight the contextual nature of accounting expertise in overseeing the quality of financial reporting.

Keywords: Audit Committee, Accounting Expertise, Accruals Quality

JEL Classification: M41, M43, M49, G34, G18, K22

Suggested Citation

Dhaliwal, Dan S. and Naiker, Vic and Navissi, Farshid, The Association Between Accruals Quality and the Characteristics of Accounting Experts and Mix of Expertise on Audit Committees (February 5, 2010). Available at SSRN: https://ssrn.com/abstract=1548766 or http://dx.doi.org/10.2139/ssrn.1548766

Dan S. Dhaliwal

University of Arizona - Department of Accounting (deceased)

Vic Naiker (Contact Author)

University of Melbourne - Faculty of Business and Economics ( email )

198 Berkeley Street
Melbourne, Victoria, 3010
Australia

Farshid Navissi

Monash University ( email )

Building H, Caulfield Campus
Melbourne, Victoria 3142 Vic 3145
Australia
+61 405 664941 (Phone)

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