Audit Committee Effectiveness and Earnings Quality: Perception-based Evidence from Uganda

Abstract

This study aims to (1) determine the association between audit committee effectiveness and earnings quality. (2) examine whether all the audit committee effectiveness attributes such as independence, financial expertise, diligence, resources and authority are significantly related to earnings quality. Methodology: The study used a cross-sectional and correlational research design. Data were collected using a survey research instrument from the Chief Finance Officers and Heads of internal audit departments of 136 regulated firms in Uganda. Data were analyzed using the Statistical Package for Social Scientists V.26. Findings: The findings indicate that audit committee effectiveness is positive and significantly associated with earnings quality. The study also reveals that amongst all the dimensions of audit committee effectiveness, only audit committee financial expertise has a positive and significant effect on earnings quality in regulated firms in Uganda. Research implications/Limitations: This study focused only on regulated firms in Uganda. Future studies could be carried out in unregulated firms in Uganda. Originality/Value: The study is one of the few studies that examines earnings quality using a perception-based approach. Also, the study reveals that only audit committee financial expertise explains more variations in earnings quality than the other four dimensions do, in regulated firms in Uganda.