The Moderating Impact of the Big-4 on Audit Committee and Earnings Management: During Pre-Post IFRS Adoption in Malaysia

Abstract

This study investigates the moderating impact of Audit Quality (AQ)on Audit Committee (AC) and Financial Reporting Quality (FRQ) duringpre-post IFRS full adoption. It argues that the AC improves FRQ butsubject to the choice of auditor. The study considers several variables onits measurements related to dependent, independent, moderate, controlvariables which include measures such as discretionary accruals, theyearly number of AC meetings and the dummy variable. AQ is measuredby a firm’s auditor choice of the Big-4 and Non-Big 4 as an indicationfor the demand for high/low quality financial reporting. Using 567 listedfirm-year observations from 2009 to 2015, investigations were deductedhttps//:doi.org/10.36394/jhss/17/1A/1The Moderating Impact of the Big-4 on Audit Committee and Earningsby examining the statistical significance difference during pre-post IFRSfull adoption, using multiple regression analysis and paired sample t-test.The findings show that the Big-4 choice increases the relationship on theAC and FRQ when companies are adopting IFRS. The level of differenceon earnings management practice was not significant. However, the resultshows that IFRS full adoption have limited managerial discretion and thepossibility for Earnings Management for Malaysian companies.