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Audit committee and impression management in financial annual reports: evidence from Jordan

Audit committee and impression management in financial annual reports: evidence from Jordan The current paper aims at exploring the audit committee characteristics’ effect on impression management.Design/methodology/approachThe methodology is based on the use of the content analysis of financial annual reports, as data of a 69-company sample study from 2015 to 2019 attained from “Amman Stock Exchange” has been analyzed. Moreover, multiple regression analysis on panel data was employed.FindingsThe results show that the independence of the audit committee, the financial expertise of the audit committee and female members negatively affect impression management, implying that these characteristics mitigate financial reporting manipulation and decrease the practices of impression management. However, the findings detect no significant influence for committee meetings on impression management.Research limitations/implicationsNotably, the current work is applicable and useful for understanding the audit committee’s role in enhancing the financial reporting’s quality, along with the significance of the audit committee in growing the stakeholder’s confidence in financial reporting. In light of these results, regulatory bodies’ efforts are encouraged to create additional strategies and instructions to ensure the trustiness and credibility of financial reporting.Originality/valueThis paper will be useful to companies that want to improve the quality of financial reporting and decrease the impression of management’s effect on financial reporting’s readers. Moreover, this paper contributes to the literature on impression management by exploring the effect of audit committees on impression management of annual financial reports of the users in the context of emerging markets and Middle East countries, particularly Jordan. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png EuroMed Journal of Business Emerald Publishing

Audit committee and impression management in financial annual reports: evidence from Jordan

Makhlouf, Mohammed Hassan
EuroMed Journal of Business , Volume 19 (3): 24 – Aug 20, 2024
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References (97)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1450-2194
DOI
10.1108/emjb-01-2022-0009
Publisher site
See Article on Publisher Site

Abstract

The current paper aims at exploring the audit committee characteristics’ effect on impression management.Design/methodology/approachThe methodology is based on the use of the content analysis of financial annual reports, as data of a 69-company sample study from 2015 to 2019 attained from “Amman Stock Exchange” has been analyzed. Moreover, multiple regression analysis on panel data was employed.FindingsThe results show that the independence of the audit committee, the financial expertise of the audit committee and female members negatively affect impression management, implying that these characteristics mitigate financial reporting manipulation and decrease the practices of impression management. However, the findings detect no significant influence for committee meetings on impression management.Research limitations/implicationsNotably, the current work is applicable and useful for understanding the audit committee’s role in enhancing the financial reporting’s quality, along with the significance of the audit committee in growing the stakeholder’s confidence in financial reporting. In light of these results, regulatory bodies’ efforts are encouraged to create additional strategies and instructions to ensure the trustiness and credibility of financial reporting.Originality/valueThis paper will be useful to companies that want to improve the quality of financial reporting and decrease the impression of management’s effect on financial reporting’s readers. Moreover, this paper contributes to the literature on impression management by exploring the effect of audit committees on impression management of annual financial reports of the users in the context of emerging markets and Middle East countries, particularly Jordan.

Journal

EuroMed Journal of Business – Emerald Publishing

Published: Aug 20, 2024

Keywords: Corporate governance; Audit committee; Impression management; Quality of the financial reporting

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