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Abstract

This study examines the effect of audit committee characteristics namely audit committee independence, accounting background of the audit committee chairman and financial expertise of audit committee members on the financial restatements of the public listed companies in Malaysia. Previous studies that investigated the relationship between audit committee characteristics and financial restatements were done in foreign countries. Therefore, this study contributes to the literature in this field of study in Malaysia. This study utilizes the annual reports for the fiscal year 2014. By using the logistic regression analysis, the result shows that there is a negative significant relationship between the audit committee independence and financial restatements. However, with regards the results for the accounting background of the chairman of audit committee and the financial expertise of audit committee members reveal that the relationship are not statistically significant. Further analyses are also carried out in order to examine the robustness of the relationship between audit committee characteristics and financial restatements. Also, this study discusses the implications and recommendations.

Keywords: Financial restatements, audit committee independence, audit committee chairman, financial expertise

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