The Influence Of Female Members In Audit Commiitte On Earnings Quality

Audit Committee performs the supervision function in the forming process of financial statements to ease the agency conflicts and maintenance the interests of shareholders.But there are also many listed companies that make financial restatement and certified public accountants that are replaced for non-standard audit reports.The phenomenon shows that the governance efficiency of Audit Committee ought to be improved.To enhance the governance effectiveness of Audit Committee,we should research on the factors that affect it first.The existing papers of this field inspected on characteristics,like profession and independence,of the Audit Committee and governance environment of company,but pay little attention on the personal traits of Audit Committee members.As women take more positive roles in company govenance and the percentage of female members in the board increases,foreign scholars have studied what effects female directors take on financial reports,earnings management and audit quality.Some domestic scholars also find that female directors have significant influence on the corporate accounting conservatism and earnings quality.They can also help to protect the interests of minority investors.To improve the efficiency of the Audit Committee governance and women’s participation in corporate governance,we make futher study on what effects female members in audit committee take on earnings quality of corporate and the effects in different governance environment.We select the Chinese A-shares listed companies from 2011 to 2015 as samples and use the extended Jones model to calculate the substitution variables of earnings quality.There are 2009 samples and 5476 datas remianed after excluding ST,*ST as well as financial companies.Firstly,build a multiple regression equation to demonstrate whether the earnings quality will be improved if there are female members,two or more female members,or female directors in position.Then,futher demonstrate what effects female Audit Committee directors take on earnings quality using T-test.The samples are divided into two groups according to industry,asset size and nature of shares.Furthermore,divide the samples which have female directors into two groups with good or bad governance environment by two standards,which are the general manager not taking the responsibility of the board chairman and the proportion of independent directors meeting regulatory requirements.Finally,add ROA to the modified Jones modle and recalculate earnings quality to make a robustness test on the hypothesis.The results got from the research are as follows: firstly,listed companies have better earnings quality if there are female members,two or more female members or female Audit Committee directors in position,which demonstrate that having female members in Audit Committee can inhibit earnings management,improve earnings quality,reduce information asymmetry in the capital market and help to protect public investors’ interest;secondly,when the director of board don’t take the positon of general manager at the same time and the percentage of independent directors in board is no less than 1/3,female Audit Committee members have better effects on corporate govenance,showing that the female members’ work will be more effective in a favorable governing environment.With the evidence above,we make some suggestions on how to improve the governance effectiveness of Audit Committee from two aspects,the appointment of members and the improvement of governance environment.