Management attempts to avoid accounting disclosure oversight: The effects of trust and knowledge on corporate directors' governance ability [Book Review]
David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
Learn more about PhilPapers
Journal of Business Ethics 83 (2):193 - 205 (2008)
Management has the opportunity to promote self-serving accounting practices, such as earnings management, when management can effectively avoid oversight by the audit committee. This article investigates the effects of financial knowledge and dispositional trust on the ability of audit committee members to recognize management attempts to avoid full disclosure to the board and potentially deceive board members. The results of a controlled laboratory experiment with 40 experienced audit committee member participants indicate that: (1) Audit committee members with less financial knowledge are more likely to accept insufficient client explanations for accounting judgments than are more knowledgeable audit committee members; (2) Audit committee members with less financial knowledge are more likely to reject sufficient client explanations for accounting judgments than are more knowledgeable audit committee members; and (3) Audit committee members that place higher levels of trust in others are more likely to accept insufficient client explanations for accounting judgments than are less trusting committee members
|Keywords||accounting choice audit committee earnings management financial knowledge judgment trust|
|Categories||categorize this paper)|
Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
|Through your library|
References found in this work BETA
Rafik Z. Elias (2002). Determinants of Earnings Management Ethics Among Accountants. Journal of Business Ethics 40 (1):33 - 45.
Steven E. Kaplan (2001). Ethically Related Judgments by Observers of Earnings Management. Journal of Business Ethics 32 (4):285 - 298.
George J. Staubus (2005). Ethics Failures in Corporate Financial Reporting. Journal of Business Ethics 57 (1):5 - 15.
Citations of this work BETA
No citations found.
Similar books and articles
Timothy Pinghsun Huang, Jacquelyn Sue Moffitt J. Louwers & Yan Zhang (2008). Ethical Management, Corporate Governance, and Abnormal Accruals. Journal of Business Ethics 83 (3).
Pinghsun Huang, Timothy J. Louwers, Jacquelyn Sue Moffitt & Yan Zhang (2008). Ethical Management, Corporate Governance, and Abnormal Accruals. Journal of Business Ethics 83 (3):469 - 487.
Lawrence A. Hamermesh, Preliminary Report of the American Bar Association Task Force on Corporate Responsibility.
William A. Kerler & Larry N. Killough (2009). The Effects of Satisfaction with a Client's Management During a Prior Audit Engagement, Trust, and Moral Reasoning on Auditors' Perceived Risk of Management Fraud. Journal of Business Ethics 85 (2):109-136.
Joseph V. Carcello (2009). Governance and the Common Good. Journal of Business Ethics 89 (1):11 - 18.
Elizabeth Dreike Almer, Audrey A. Gramling & Steven E. Kaplan (2008). Impact of Post-Restatement Actions Taken by a Firm on Non-Professional Investors' Credibility Perceptions. Journal of Business Ethics 80 (1):61 - 76.
Sandra C. Vera-Muñoz (2005). Corporate Governance Reforms: Redefined Expectations of Audit Committee Responsibilities and Effectiveness. [REVIEW] Journal of Business Ethics 62 (2):115 - 127.
Lori Holder-Webb, Jeffrey Cohen, Leda Nath & David Wood (2008). A Survey of Governance Disclosures Among U.S. Firms. Journal of Business Ethics 83 (3):543 - 563.
J.-L. W. Mitchell Der Zahvann & Greg Tower (2004). Audit Committee Features and Earnings Management: Further Evidence From Singapore. International Journal of Business Governance and Ethics 1 (s 2-3):233-258.
J.-L. W. Mitchell Der Zahvann (2004). Association Between Board of Director Characteristics and the Amount of Voluntary Audit Committee Disclosures. International Journal of Business Governance and Ethics 1 (s 2-3):210-232.
Added to index2009-01-28
Total downloads14 ( #170,159 of 1,699,639 )
Recent downloads (6 months)2 ( #269,935 of 1,699,639 )
How can I increase my downloads?