Does Quality of Audit Committee Enhance Audit Quality?




Quality of Audit Committee, Audit Quality, Female Director, Korea


Purpose: This study investigates whether quality of audit committee affects audit quality of Korean listed firms using panel data during the period 2008 to 2018.


Theoretical framework: Recent studies show that characteristics of audit committees such as size, activity, and expertise have a significant impact on the monitoring of the financial reporting process (He and Yang, 2014; Asiriuwa et al. 2018). Therefore, it is necessary to carry out systematic empirical studies to understand the effectiveness of the audit committee from various perspectives.


Design/methodology/approach: The quality of audit committee is classified into four categories: 1) activity, 2) independence, 3) expertise, and 4) the presence of female audit committee member. Audit quality is measured by auditor size and accruals quality.


Findings: This study finds that activity and expertise of audit committee enhance audit quality whereas independence of audit committee does not affect audit quality. The female audit committee member partially enhances audit quality.


Research, Practical & Social implications: This study suggests that the high quality of the audit committee enhances the audit quality and increases the accounting transparency of the firm.


Originality/value: The empirical results of this study suggest that firm should concentrate the optimal composition of the audit committee, not simply the establishment of the audit committee.


Download data is not yet available.


Abernathy, J. L., Beyer, B., Masli, A., and Stefaniak, C. (2014). The association between characteristics of audit committee accounting experts, audit committee chairs, and financial reporting timeliness. Advances in Accounting, 30 (2), 283-297.

Abbott, L. J., & Parker, S. (2000). Auditor selection and audit committee characteristics. Auditing: Auditing: A Journal of Practice & Theory, 19 (2), 47-66.

Abbott, L. J., & Parker, S. (2002). Audit committee characteristics and auditor switches. Research in Accounting Regulation, 15, 151-166.

Abbott, L. J., Parker, S., Peters, G. F., and Raghunandan, K. (2003). The association between audit committee characteristics and audit fees. Auditing: Auditing: A Journal of Practice & Theory, 22 (2), 17-32.

An, Y. (2015). The impact of family ownership on firm value and earnings quality: Evidence from Korea. International Business Management, 9 (4), 625-636.

An, Y. (2016). Effect of outside director’s quality on firm value and earnings quality. Research Journal of Business Management, 11 (1), 39-45.

Alimbudiono, R. S., Tania, P., Hastuti, M. E., and Dewi, G. C. (2022). Exploration of Emotional Intelligent to do Difficult Auditing Service. International Journal of Professional Business Review, 7(4), e0571.

Asiriuwa, O., Aronmwan, E. J., Uwuigbe, U., and Uwuigbe, O. R. (2018). Audit committee attributes and audit quality: A benchmark analysis. Verslas: Teorija IR Praktika/Business: Theory and Practice, 19, 37-48.

Badolato, P. G., Donelson, D. C., and Ege, M. (2014). Audit committee financial expertise and earnings management: The role of status. Journal of Accounting and Economics, 58 (2-3), 208-230.

Balsam, S., Krishnan, J., and Yang, J. S. (2003). Auditor industry specialization and earnings quality. Auditing: A Journal of Practice & Theory, 22 (2), 71-97.

Bajra, U., and Cadez, S. (2018). The impact of corporate governance quality on earnings management: Evidence from European companies cross‐listed in the US. Australian Accounting Review, 28 (2), 152-166.

Bartov, E., Gul, F. A., and Tsui, J. S. (2000). Discretionary-accruals models and audit qualifications. Journal of Accounting and Economics, 30 (3), 421-452.

Beasley, M. S., Carcello, J. V., Hermanson, D. R., and Lapides, P. D. (2000). Fraudulent financial reporting: Consideration of industry traits and corporate governance mechanisms. Accounting Horizons, 14 (4), 441-454.

Blue Ribbon Committee (BRC). (1999). Report and Recommendation of the Blue Ribbon Committee on Improving effectiveness of Corporate Audit Committees. USA: NY, New York Stock Exchange and National Association of Securities Dealers.

DeAngelo, L. E. (1981). Auditor size and audit quality. Journal of Accounting and Economics, 3 (3), 183-199.

DeZoort, F. T., and Salterio, S. E. (2001). The effects of corporate governance experience and financial‐reporting and audit knowledge on audit committee members' judgments. Auditing: A Journal of Practice & Theory, 20 (2), 31-47.

Francis, J., LaFond, R., Olsson, P., and Schipper, K. (2005). The market pricing of accruals quality. Journal of Accounting and Economics, 39 (2), 295-327.

Ghafran, C., and O'Sullivan, N. (2013). The governance role of audit committees: Reviewing a decade of evidence. International Journal of Management Reviews, 15 (4), 381-407.

He, L., & Yang, R. (2014). Does industry regulation matter? New evidence on audit committees and earnings management. Journal of Business Ethics, 123 (4), 573-589.

Hubais , A. S. A., Kadir, M. R. A., Bilal, Z. O., and Alam, M. N. (2023). The Impact of Auditor Integrity to Audit Quality: an Exploratory Studies from the Middle East. International Journal of Professional Business Review, 8(1), e01254.

Jiang, J. X., Petroni, K. R., & Wang, I. Y. (2010). CFOs and CEOs: Who have the most influence on earnings management? Journal of Financial Economics, 96 (3), 513-526.

Kallapur, S., Sankaraguruswamy, S., & Zang, Y. (2010). Audit market concentration and audit quality. Available at SSRN 1546356.

Kim, S. H., and An, Y. (2019). Influence of Family Ownership on Earnings Quality. Asian Journal of Business and Accounting, 12 (2), 61-92.

Klein, A. (2002). Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics, 33 (3), 375-400.

Kusnadi, Y., Leong, K. S., Suwardy, T., and Wang, J. (2016). Audit committees and financial reporting quality in Singapore. Journal of Business Ethics, 139 (1), 197-214.

Kwon, I., and Park, C. Y. (2021). Corporate Governance and the Efficiency of Government R&D Grants. Global Economic Review, 50 (4), 293-309.

Lawrence, A., Minutti-Meza, M., and Zhang, P. (2011). Can Big 4 versus non-Big 4 differences in audit-quality proxies be attributed to client characteristics? The Accounting Review, 86 (1), 259-286.

Lee, H. Y., Mande, V., and Ortman, R. (2004). The effect of audit committee and board of director independence on auditor resignation. Auditing: A Journal of Practice & Theory, 23 (2), 131-146.

Maraghni, I., and M. Nekhili (2014), “Audit Committee Diligence in French Companies:A Question of Independence or Competence?” Accounting Auditing Control, 20 (2), 1-30.

Menon, K., and Williams, J. D. (1994). The use of audit committees for monitoring. Journal of Accounting and Public Policy, 13 (2), 121-139.

Mustafa, A. S., Che-Ahmad, A., and Chandren, S. (2018). Board diversity, audit committee characteristics and audit quality: The moderating role of control-ownership wedge. Business and Economic Horizons, 14, 587-614.

Nam, H. J., and An, Y. (2021). The Effect of Corporate Social Responsibility and Board Gender Diversity on Bankruptcy: Evidence from Korea. Asian Academy of Management Journal, 26 (2), 53-74.

Nguyen, T., Nguyen, H. G., and Yin, X. (2015). Corporate Governance and Corporate Financing and Investment during the 2007‐2008 Financial Crisis. Financial Management, 44 (1), 115-146.

O'Keefe, T. B., Simunic, D. A., and Stein, M. T. (1994). The production of audit services: Evidence from a major public accounting firm. Journal of Accounting Research, 32 (2), 241-261.

Serra, S., Lemos, K. M., and Matins, M. S. (2021). The Influence of the Board of Directors and the Auditor in the Disclosure of Derivative Financial Instruments: Evidence on Portuguese Capital Market. International Journal of Professional Business Review, 7(1), e0240.

Sharma, V. D., and Kuang, C. (2014). Voluntary Audit Committee Characteristics, Incentives, and Aggressive Earnings Management: Evidence from New Zealand. International Journal of Auditing, 18 (1), 76-89.

Simunic, D. A., and Stein, M. T. (1996). Impact of litigation risk on audit pricing: A review of the economics and the evidence. Auditing: A Journal of Practice & Theory, 15, 119-134.

Sultana, N., Singh, H., and Rahman, A. (2019). Experience of audit committee members and audit quality. European Accounting Review, 28 (5), 947-975.

Ward, A. M., and Forker, J. (2017). Financial management effectiveness and board gender diversity in member-governed, community financial institutions. Journal of Business Ethics, 141 (2), 351-366.

Xie, B., Davidson III, W. N., and DaDalt, P. J. (2003). Earnings management and corporate governance: the role of the board and the audit committee. Journal of Corporate Finance, 9 (3), 295-316.

Zgarni, I., Hlioui, K., and Zehri, F. (2016). Effective audit committee, audit quality and earnings management: Evidence from Tunisia. Journal of Accounting in Emerging Economies, 6 (2), 138-155.

Zureigat, Q. M. (2011). The effect of ownership structure on audit quality: Evidence from Jordan. International Journal of Business and Social Science, 2 (10), 38-46.




How to Cite

An, Y. (2023). Does Quality of Audit Committee Enhance Audit Quality?. International Journal of Professional Business Review, 8(2), e03185.