Abstract:
The purpose of this study is to examine the relationship between audit committees
(AC) and board of directors with earnings quality of the firms listed on diversified
holdings sector, over the period 2012/13 to 2016/17 by using AC proxies, namely AC
expertise, AC independence, and AC meetings and board structure variables such as
board expertise, board independence, and board size. For the study, a sample of 17
companies has been selected, and Standard Jones Model (1991) has been employed
for calculating discretionary accruals. Results from correlation and regression
analysis suggests that measures of AC - audit meetings and board structure- board
size are significantly related to earnings quality in a manner that is generally
consistent with the predictions of agency theory. Furthermore, the results depicted
insignificant negative impact of other AC and board characteristics on discretionary
accruals, except board expertise, which had an insignificant positive impact on
discretionary accruals.
