Audit committee characteristics and earning management of insurance companies in Ethiopia

Abstract

AbstractOne of the key components of corporate governance frameworks, the audit committee is a potent instrument for controlling and supervising earning management. It might significantly affect how decisions about internal firm-board monitoring are made. The purpose of this study was to investigate the impact of audit committee features on the earning management of insurance businesses in Ethiopia from 2015 to 2022. The impact of audit committee features on earning management was studied using the generalized moment (GMM) model. According to the study, the size of the audit committee (ACS) has a significant and positive impact on the insurance companies’ earnings management in Ethiopia. Additionally, the study discovered that the audit committee’s independence (ACI), expertise (ACE), meeting (ACM), and gender (ACG) all have a significant and positive impact on the earning management of insurance companies in Ethiopia. Thus, the study came to the conclusion that all audit committee characteristic measures have a significant impact on the discretionary accrual (DA)-measured earning management of insurance businesses in Ethiopia. Therefore, the internal governance mechanisms should be strengthened and improved by insurance company policymakers in Ethiopia.

Keywords

• Earning management
• discretionary accrual
• audit committee expertise
• insurance companies and audit committee independence
• Collins Ntim, University of Southampton, United Kingdom of Great Britain and Northern Ireland