THE IMPACT OF BOARD EFFECTIVENESS, AUDIT COMMITTEE AND AUDIT QUALITY ON FINANCIAL REPORTING QUALITY OF LISTED COMPANY IN STOCKS EXCHANGE OF THAILAND IN THE EVENT OF SEASONED EQUITY OFFERINGS
Abstract
This study was intended to investigate: (1) studying factors of audit committee
effectiveness, audit quality and board effectiveness that affects financial reporting quality,
(2) studying the relationship between audit committee effectiveness, audit quality and
board effectiveness that help reduce discretionary accruals, whether or not those affect
financial reporting quality, and (3) studying whether or not financial reporting quality is
improved in a year with seasoned equity offerings.
Research methodologies were quantitative methods adopted by using the RandomEffects
Model analyzed from Panel data.
The sample were listed companies in the Stocks Exchange of Thailand, including all industry groups except those in financial industry
groups, between 2008 and 2012 consisting of 1,239 firm-year observations.
The results showed that a positive relationship was significantly found between audit
committee effectiveness and financial reporting quality, depending on audit firm size; as a
large audit firm’s authority is designated to push clients to disclose more inf ormation in
their annual reports. For board committee effectiveness, it was found statistically to be
positively associated with financial reporting quality as expected, based on firm size. In
contrast, there was no relationship found between audit committee effectiveness and
financial reporting quality. However, control variables (growth and firm size) were found
related to financial reporting quality in the opposite direction.