Volume 20 Issue 1, April 2025

 

ARTICLE INFO
Article History:
Received: 17 March 2025
Accepted: 20 March 2025
Published: 30 April 2025

ASIA-PACIFIC MANAGEMENT ACCOUNTING JOURNAL. VOL. 20 ISSUE 1

NAVIGATING INDEPENDENCE AND EXCELLENCE: HOW AUDIT COMMITTEE TRAITS SHAPE EARNINGS QUALITY IN TOP SECTORS IN MALAYSIA?

Razana Juhaida Johari1,3, Norfadzilah Rashid2♣, and Norliana Mohd Kamil3

1,3Accounting Research Institute, Universiti Teknologi MARA, Malaysia
2School of Accountancy, Faculty of Business and Management, Universiti Sultan Zainal Abidin, UniSZA, Malaysia

 

ABSTRACT

This study examines how audit committee characteristics influence earnings quality (EQ), focusing on the mediating role of audit quality (AQ). Using panel data from 2019 to 2021 and fixed and random effects regression models, the study analyzes variables such as audit committee independence (ACI), financial expertise (ACE), meeting frequency (ACM), leverage (LEV), and firm size. Results show that ACI and ACE negatively affect EQ, while leverage positively impacts it. Notably, AQ mediates these relationships, highlighting its crucial role in enhancing financial reporting. Interestingly, frequent audit committee meetings are linked to lower EQ, suggesting that meeting frequency should be strategically managed. The findings underscore the importance of a well-structured audit committee in improving audit and earnings quality, which is essential for strong corporate governance and financial crime prevention. While the research focuses on leading sectors in Malaysia, the insights have broader implications for improving financial transparency and investor confidence across various industries. The study emphasizes the need for balance in audit committee attributes and effective oversight to ensure reliable and transparent financial reporting. 

Keywords: Audit Committee Characteristics, Earnings Quality, Audit Quality, Corporate Governance

Corresponding Author: Norfadzilah Rashid; School of Accountancy, Faculty of Business and Management, Universiti Sultan Zainal Abidin, UniSZA, Malaysia; Email: nikmfadzilah@unisza.edu.my; Tel; +60145071610