Earnings conservatism and audit committee financial expertise

Using an Australian sample of 494 firm‐year observations, this study finds that accounting financial expertise is the primary type of expertise that influences earnings conservatism, rather than nonaccounting financial expertise. The association between accounting financial expertise and conservatis...

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Veröffentlicht in:Accounting and finance (Parkville) 2015-03, Vol.55 (1), p.279-310
Hauptverfasser: Sultana, Nigar, Mitchell Van der Zahn, J-L. W.
Format: Artikel
Sprache:eng
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Zusammenfassung:Using an Australian sample of 494 firm‐year observations, this study finds that accounting financial expertise is the primary type of expertise that influences earnings conservatism, rather than nonaccounting financial expertise. The association between accounting financial expertise and conservatism holds only when the accounting financial expert(s) on audit committees is (are) independent. Overall, results suggest that audit committee accounting financial expertise is important in recognising the asymmetrical timeliness of losses. Findings provide a better understanding of the dynamics between audit committee financial expertise and earnings conservatism and demonstrate the importance of accounting financial expertise in improving financial reporting quality.
ISSN:0810-5391
1467-629X
DOI:10.1111/acfi.12042