Use this URL to cite or link to this record in EThOS: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.775426
Title: The relationship between audit committee characteristics, financial statement restatements, and audit fees : US evidence
Author: Almutairi, Samirah Saleh M.
ISNI:       0000 0004 7962 6021
Awarding Body: Durham University
Current Institution: Durham University
Date of Award: 2019
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Abstract:
This thesis aims to provide oversights about the impact of audit committee characteristics on constraining the occurrence of financial statement restatements. It also examines the impact of audit committee characteristics on audit fees following the incident of restatements. In addition, to increase the generalisability of the results of this study, it examines the impact of audit committee characteristics on mitigating the occurrence of restatements in family businesses. The study examines abovementioned issues, using 450 restatement announcements and matching them with a peer group of 450 control firms that are similar in size and industry. It covers the period of 2011-2016 using the U.S. context. The results reveal that larger audit committees, and audit committee tenure, are associated negatively with the incidence of restatements. Thus, regulators and policy makers should motivate companies to assign a large number of audit committee directors to increase their effectiveness. Work tenure also assists audit committee directors to be familiar with the firms and their operation and accounting systems. It therefore enables them to detect any accounting irregularities before issuing the financial statements. Regulators and policy makers also should established a code that force companies to keep their audit committee directors for a period of time and avoid changing them unless they show ineffective role. Moreover, busy directors are ineffective at constraining the likelihood of restatements, as they do not devote enough time and effort to monitoring the financial reporting process. Regulators and policy makers, therefore, should prohibit audit committee directors from serving in many boards at the same time. The study reports a significant result about the impact of audit committee characteristics on audit fees following the incident of restatements. Busy Audit committee directors demand extensive audit work to protect their reputational capital following restatements because they do not put enough time to oversight the external audit quality. This finding proves to regulators and policy makers that busy directors have also a negative impact not only on financial reporting process but also on external audit quality. Audit committee directors with greater stock ownership also exhibit a positive association with external audit quality. Thus, it is recommended to compensate audit committee directors with stock ownership to align the interests of directors and shareholders. In terms of the impact of audit committee characteristics on mitigating the occurrence of restatements in family businesses, the findings support the result and find that audit committee tenure, as well as audit committee stock ownership in family business, also has a positive impact and can mitigate the incidence of restatements. Thus, long work tenure and stock ownership should be adopted also in family business.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (D.B.A.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.775426  DOI: Not available
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