The effect of audit committee characteristics on compliance with IFRS for related party disclosures: Evidence from South Africa

Abstract

Purpose

The purpose of this paper is to examine the effect of audit committee (AC) characteristics (size, independence, the number of meetings and expertise) on compliance with International Financial Reporting Standards (IFRS) for related party disclosures (CRPD) in the South African context.

Design/methodology/approach

This paper is based on an analysis of the consolidated financial statements of 120 non-financial firms listed on the Johannesburg Stock Exchange (JSE) for the period 2012 to 2014. Panel regressions have been used.

Findings

The findings of this paper reveal that CRPD is positively influenced by AC independence. However, AC size and the number of AC meetings do not affect CRPD. Regarding expertise, the authors find that there is a positive and significant relationship between CRPD and have combined industry expertise with accounting and financial expertise. However, while accounting expertise by itself is associated with CPRD, industry expertise by itself is not associated with CRPD.

Originality/value

To the best of the authors’ knowledge, there are no empirical studies that have addressed the effect of AC characteristics on compliance with IFRS for CRPD.

Citation

Mnif Sellami, Y. and Borgi Fendri, H. (2017), "The effect of audit committee characteristics on compliance with IFRS for related party disclosures: Evidence from South Africa", Managerial Auditing Journal, Vol. 32 No. 6, pp. 603-626. https://doi.org/10.1108/MAJ-06-2016-1395