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The role of audit committees in decreasing earnings management: Korean evidence


  • Jong-Hag Choi
  • Kyu-An Jeon
  • Jong-Il Park


The several accounting scandals that have occurred recently in the USA suggest the importance of well-functioning audit committees. This study examines how the characteristics of audit committees – independence, competency and activity – are related to earnings management. The data used in the analyses are collected from the Korean stock market during the period 2000-2001. The empirical results demonstrate that the independence and competency of the audit committee are associated with the earnings management of a firm. Specifically, the committee members' shareholdings are positively associated with earnings management, while the presence of professors or the employees of financial institutions on the committee is negatively associated with earnings management. However, the activity measure of the committee is not significantly related to earnings management. These results suggest several important implications for regulatory bodies on the composition of audit committees.

Suggested Citation

  • Jong-Hag Choi & Kyu-An Jeon & Jong-Il Park, 2004. "The role of audit committees in decreasing earnings management: Korean evidence," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 1(1), pages 37-60.
  • Handle: RePEc:ids:ijaape:v:1:y:2004:i:1:p:37-60

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    Cited by:

    1. Kamran & Attaullah Shah, 2014. "The Impact of Corporate Governance and Ownership Structure on Earnings Management Practices: Evidence from Listed Companies in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(2), pages 27-70, July-Dec.
    2. repec:pdc:jrnbeh:v:14:y:2018:i:3:p:451-476 is not listed on IDEAS
    3. Hany Kamel, 2010. "Assessing the perceptions of the quality of reported earnings in Egypt," Managerial Auditing Journal, Emerald Group Publishing, vol. 25(1), pages 32-52, February.
    4. repec:kap:jmgtgv:v:22:y:2018:i:2:d:10.1007_s10997-017-9386-4 is not listed on IDEAS
    5. Peter Baxter & Julie Cotter, 2009. "Audit committees and earnings quality," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(2), pages 267-290, June.
    6. repec:spr:schmbr:v:18:y:2017:i:2:d:10.1007_s41464-017-0028-9 is not listed on IDEAS
    7. Diogo Batista da SIlva & António Cerqueira & Elísio Brandão, 2017. "Earnings Management Dynamics in Portuguese Listed Firms," FEP Working Papers 587, Universidade do Porto, Faculdade de Economia do Porto.
    8. repec:eee:jbrese:v:84:y:2018:i:c:p:253-270 is not listed on IDEAS


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