AUDIT COMMITTEE CHARACTERISTICS, REGULATORY CHANGES AND FINANCIAL REPORTING QUALITY IN IRAQ: SOME LESSONS FROM SOX ACT

Authors

Keywords:

Audit Committee, Sarbanes-Oxley Act, Financial reporting, Iraq

Abstract

This study aims to examine the impact of audit committee characteristics such as audit committee size, audit committee meetings, audit committee independence, and the financial expertise of audit committee on the quality of financial reporting in non-financial firms operating in Iraq. In addition to that the study also examines the direct and moderating role of regulatory changes at the nexus between audit committee characteristics and quality of financial reporting in the context of non-financial firms in Iraq. The particular focus of the study is on the implications of Sarbanes-Oxley Act in Iraq. For this purpose, the author selects 170 organizations as the study sample which comprises a total of 850 firm-year observations. For further analysis, only 575 organizational-years observations are included. The multiple regression model is used to analyze this data. Referring to the resource dependence theory, results indicate that characteristics of an Audit Committee are highly resourceful, which leads to enhancement of the financial reporting quality because of the expertise, greater skills, and shared experiences. The regulatory changes also appear to be a significant direct and intervening factor in the relationship between the characteristics of an Audit Committee and reporting quality in the non-financial firms of Iraq.

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Published

2021-06-15