Audit Committee Characteristics and Real Earnings Management: A Review of Existing Literature and the New Avenue of Research

Belal Ali, Hasnah Kamardin


The role of the audit committee in financial reporting has received significant attention in accounting research. Researchers have examined whether certain audit committee characteristics (ACCs) mitigating managers earnings management practices. Recently, literature provides evidence that companies, under different reasons, switched earnings management practices from accrual-based to real earnings management (REM). The main objective of this study is to review the literature that investigated the relationship between ACCs and REM. The literature to date seems to offer inconsistent results, even though studies mostly show insignificant relationship. This conclusion suggests that the effectiveness of the audit committee must be improved and future studies should further investigate the role of ACCs on mitigating REM. Finally, this review of the literature has the possible to help policymakers, and researchers to evaluate the audit committee role and hence enhancing its monitoring on REM practices.


Audit committee characteristics, real earnings management, financial reporting quality

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