Arzizeh Tiesieh Tapang
Department of Accounting, Faculty of Social and Management Sciences, University of Buea, P. O. Box 63, Buea, South West Region – Cameroon.
DOI : https://doi.org/10.47191/ijmra/v6-i8-48Google Scholar Download Pdf
ABSTRACT:
This study aims at examining the moderating role of audit committee’s legal expertise on risk management and financial reporting quality. An ex-post facto research design was adopted and data collected from secondary sources were analysed through a structural equation modelling approach with the aid of a partial least square technique. The results revealed that the quality of financial reporting is greatly impacted by risk management. Additional, the study revealed that the quality of financial reporting is influenced by the audit committee's legal expertise. Furthermore, the study revealed that the legal knowledge of the audit committee acts as a moderating factor, strengthening the connections between risk management and financial reporting quality. The study concludes that members of audit committees with legal expertise are more likely to exercise caution while engaging in business activities that could have legal repercussions. The likelihood that the banks may incur legal obligations is also associated with the quality of the financial reporting. The study therefore, recommends that in order to ensure investor confidence in the quality of financial reporting, regulators should keep an eye on the requirement for legal knowledge on audit committees. Professional organizations should see to it that legislation is written to safeguard investors' interests.
KEYWORDS:Default risk, litigation risk, Risk of investor distrust, Risk Management, Financial reporting quality, Moderation
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