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    Earnings conservatism and audit committee financial expertise

    Access Status
    Fulltext not available
    Authors
    Sultana, Nigar
    Van der Zahn, J-L.W.
    Date
    2012
    Type
    Conference Paper
    
    Metadata
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    Citation
    Sultana, N. and Van der Zahn, J. 2012. Earnings conservatism and audit committee financial expertise, in Cahan, S. (ed), 2012 AFAANZ Conference, Jun 30 2012, Paper 244. Melbourne: Wiley-Blackwell Publishing Asia.
    Source Title
    AFAANZ 2012 Conference Proceedings
    Source Conference
    2012 AFAANZ Conference
    Additional URLs
    http://afaanz.org/openconf/2012/openconf.php
    ISSN
    1467-629X
    School
    School of Accounting
    URI
    http://hdl.handle.net/20.500.11937/27298
    Collection
    • Curtin Research Publications
    Abstract

    This study examines the association between earnings conservatism and four different measures of audit committee financial expertise. Statistical tests are based on 494 firm-year observations drawn from Australian publicly listed firms between January 1 2004 and December 31 2008. Consistent with expectations, tests find a statistically significant association between earnings conservatism and a) overall financial expertise, b) accounting financial expertise and c) independent financial expertise. However, only a weak association is found between earnings conservatism and audit committee non-accounting financial expertise. Overall, results infer that audit committee financial expertise is a key determinant of the asymmetrical timeliness of loss recognition (both via stock returns and accruals). Findings provide valuable insights and greater understanding to various special interest groups (e.g., corporate governance reformists, regulators, scholars), of the individual dynamics between audit committee financial expertise and earnings conservatism contributing, therefore, to the literature on the importance of audit committee financial expertise in improving financial reporting quality.

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