Audit Committee Characteristics and Quality of Financial Information: The Role of the Internal Information Environment and Political Connections

Namakavarani, Omid Mehri; Daryaei, Abbas Ali; Askarany, Davood; Askary, Saeed

doi:10.3390/jrfm14060273

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Audit Committee Characteristics and Quality of Financial Information: The Role of the Internal Information Environment and Political Connections

Omid Mehri Namakavarani

Abbas Ali Daryaei

Davood Askarany

^3,*

and

Saeed Askary

⁴

Department of Accounting, Qazvin Branch, Islamic Azad University, Qazvin 19585, Iran

Accounting Department, Faculty of Social Science, Imam Khomeini International University, Qazvin 34148, Iran

Business School, Accounting and Finance, the University of Auckland, Auckland 92019, New Zealand

⁴

Department of Accounting and MIS, Gulf University for Science and Technology, Kuwait City 32093, Kuwait

Author to whom correspondence should be addressed.

Academic Editor: Khaled Hussainey

J. Risk Financial Manag. 2021, 14(6), 273; https://doi.org/10.3390/jrfm14060273

Received: 11 May 2021 / Revised: 9 June 2021 / Accepted: 9 June 2021 / Published: 17 June 2021

(This article belongs to the Special Issue Predictive Analytics and Machine Learning)

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Abstract

This study explores the relationship between audit committee characteristics and accounting information quality by justifying the role of the internal information environment and political connections under the theocracy state of Iran with syncretic politics. Using panel data of 558 firms from the Tehran Stock Exchange (TSE) for 2011–2016, we rank firms using Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) and entropy method for determination of the weight of evaluating indicators. The firms are positioned into high- to low-level political connections, and two proxies for audit committee characteristics are used: independence of audit committee and financial knowledge. Furthermore, three proxies are used for an internal information environment: earning announcement speed, the accuracy of earning forecasting and lack of financial restatements. Our findings show that there is a significant and positive relationship between the audit committee and financial information quality characteristics in high-level political connections, as well as between financial knowledge and financial information quality. Furthermore, the findings of this study suggest that the application of political economy theories could be appropriate for more inquiry. View Full-Text

Keywords: audit committee characteristics; accounting information quality; internal information environment; political connections; TOPSIS

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

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MDPI and ACS Style

Namakavarani, O.M.; Daryaei, A.A.; Askarany, D.; Askary, S. Audit Committee Characteristics and Quality of Financial Information: The Role of the Internal Information Environment and Political Connections. J. Risk Financial Manag. 2021, 14, 273. https://doi.org/10.3390/jrfm14060273

AMA Style

Namakavarani OM, Daryaei AA, Askarany D, Askary S. Audit Committee Characteristics and Quality of Financial Information: The Role of the Internal Information Environment and Political Connections. Journal of Risk and Financial Management. 2021; 14(6):273. https://doi.org/10.3390/jrfm14060273

Chicago/Turabian Style

Namakavarani, Omid M., Abbas A. Daryaei, Davood Askarany, and Saeed Askary. 2021. "Audit Committee Characteristics and Quality of Financial Information: The Role of the Internal Information Environment and Political Connections" Journal of Risk and Financial Management 14, no. 6: 273. https://doi.org/10.3390/jrfm14060273

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Audit Committee Characteristics and Quality of Financial Information: The Role of the Internal Information Environment and Political Connections

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