The Relationship between Audit Committee Attributes and Financial Reporting Quality among Manufacturing Firms in Kenya

Document Type : Original Research

Author

Department of Accounting and Finance, Pioneer International University, Ngara, Nairobi, Kenya

Abstract

This study examines the relationship between Audit Committee Attributes and Changes in Financial Reporting Quality Among Manufacturing Firms in Kenya. Using a sample of publicly listed firms based on 2010-2018 data, our study finds that the expertise of the Audit Committee has an insignificant positive impact on the financial reporting quality of financial reports, measured by accrual quality. Audit committee size and financial reporting quality show mixed findings for two measures of financial reporting quality. The results show a positive, statistically significant effect between the size of the audit committee and discretionary accruals. On the contrary, the size of the audit committee shows a statistically positive insignificant relationship with accruals quality. Audit committee independence has a statistically significant effect on both accruals' quality and discretionary accruals as measures of financial reporting quality. Finally, audit committee meetings on the financial reporting quality show a negative nonsignificant relationship between audit committee meetings on both accruals' quality and discretionary accruals. The results of this research may be of interest for policymakers who have the authority over the appointment of audit committee members to choose independent and expert individuals, for regulators to reconsider their rules and mandate concerning corporations and their corporate governance structure.

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Main Subjects


©2022 The Author(s). This is an open access article distributed under the terms of the Creative Commons Attribution (CC BY 4.0), which permits unrestricted use, distribution, and reproduction in any medium, as long as the original authors and source are cited. No permission is required from the authors or the publishers.

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