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.