Audit committee effectiveness and earnings management among publicly listed firms in Kenya

Abstract

Objective: The papersought to investigate the role of an effective audit committee in controlling earnings management practices.Design / Methodology: A panel data sourced from the audited financial reports of firms listed at the KenyanNairobi Securities Exchange for the periods between 2004 and 2017 were analyzed using a panel regression model. Findings: Audit committee effectiveness proved an important monitoring mechanism forearnings management. The independence, Meeting frequency,and financial expertise of the audit committee evidenced a negative and significant effect on earnings management.Practical Implications: Firms needto ensure that their audit committeesoperate effectively. This is achieved through enhancing their independence, ensuring optimal meeting frequency,and a higher number of members with financial expertise for fewerearnings management. Originality: The paper suggests the ways through which audit committee effectiveness can beenhanced to reduce earnings management amidrampant global financial scandals.