| Summary: | 碩士 === 國立雲林科技大學 === 管理研究所博士班 === 99 === This paper aims to examine the impact of audit committee formation and structure on earnings management. Since Taiwan’s authorities amended the Securities and Exchange Act in early 2006, the official introduction of audit committees has allowed companies to voluntarily choose to set up supervisors or an audit committee. In view of the audit committee of the functional of internal control and accounting information quality, this study based on relevant literature to establish two main hypothesis: the audit committee formation and earnings management inversely associated, and the audit committee structure helps to reduce earnings management.
Using a sample of publicly traded companies on the Taiwan stock market from 2007 to 2009, our empirical results show that those firms that voluntarily choose to set up audit committees, as opposed to maintain of supervisors, have lower levels of earnings management; furthermore, the higher the audit committee functional index, relatively lower level of earnings management. Thus the two hypotheses are supported.
Among the audit committee structure related-variables, although there is a negative relationship between earnings management and audit committee meeting frequency as well as audit committee expertise, there is insufficient evidence to support an inverse association between earnings management and audit committee size. For the board structure-related variables, board size is negatively related to earnings management. However, with respect to board independence, board meeting frequency and CEO non-duality, we have insufficient evidence to support to their role in the suppression of earnings management.
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