Board Characteristics, Audit Committee and Audit Quality: The Case of Indonesia

T. Suryanto, J.E. Thalassinos, E.I. Thalassinos
International Journal of Economics & Business Administration, Volume V, Issue 3, 44-57, 2017

Abstract:

The purpose of this research is to examine the relationship between board size, number of non-executive directors, the financial expertise of the non-executive directors representing the audit committee and the audit quality.Data from non-financial firms listed in the Indonesian Stock Exchange have been used. To achieve the research objectives, we have used the logit regression. The data of 121 listed firms in a five-year period from 2012 to 2016 is collected from the printed audit accounts available on companies‘ websites. The emergence of corporate governance phenomena has brought upon many structural changes in firms‘ governance structure such as the audit committee role and the audit quality.The second decade which starts with the warmth of subprime crisis has seen a significant development in the code of corporate governance. The role of the audit committee is now significant and being recognized as the solution of prevention of internal fraud.The findings of the study have shown that in non-financial firms listed in the Indonesian Stock Exchange audit committee and board characteristics have significant effect on audit quality. This study will be helpful for students, auditors, policymakers and researchers to understand the impact of corporate governance in audit quality.


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