The moderating impact of the big-4 on audit committee and earnings management : during pre-post IFRS adoption in Malaysia \

Abstract EN

This study investigates the moderating impact of Audit Quality (AQ) on Audit Committee (AC) and Financial Reporting Quality (FRQ) during pre-post IFRS full adoption.

It argues that the AC improves FRQ but subject to the choice of auditor.

The study considers several variables on its measurements related to dependent, independent, moderate, control variables which include measures such as discretionary accruals, the yearly number of AC meetings and the dummy variable.

AQ is measured by a firm’s auditor choice of the Big-4 and Non-Big 4 as an indication for the demand for high/low quality financial reporting.

Using 567 listed firm-year observations from 2009 to 2015, investigations were deducted by examining the statistical significance difference during pre-post IFRS full adoption, using multiple regression analysis and paired sample t-test.

The findings show that the Big-4 choice increases the relationship on the AC and FRQ when companies are adopting IFRS.

The level of difference on earnings management practice was not significant.

However, the result shows that IFRS full adoption have limited managerial discretion and the possibility for Earnings Management for Malaysian companies