The Role of Audit Committees in Persisting Earnings as Evidence of Earnings Quality

Abstract

The aim of this study was to investigate the characteristics of the audit committees in Jordanian Industrial Corporation, and their effect on earnings quality which is measured by persistence of earnings. The study included 50 industrial corporations listed in Amman stock exchange from 2004-2009. By using Pooled Regression method, the study concluded that there is a positive effect for the number of meetings of audit committee members on the earnings quality. There was also a negative effect for audit committee ownership on the earnings quality. At the same time,-- there was no effect for other characteristics of audit committee (size of audit committee, independence of audit committee members, and financial expertise of audit committee members) on improving earnings quality. Based on their results, the study recommended to several aspects either organizers or supervisions on the Jordanian financial market to activate the tools of corporate governance in terms of audit committee and implementation the principles.