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When does audit committee busyness influence earnings management in the UK? Evidence on the role of the financial crisis and company size

journal contribution
posted on 20.10.2021, 08:39 by Chaudhry Ghafran, Noel O'SullivanNoel O'Sullivan, Sofia Yasmin
We investigate the impact of audit committee busyness on earnings management in FTSE350 companies between 2007 and 2013, a period incorporating the global financial crisis and its immediate aftermath. Using a range of busyness measures and examining the impact on both accruals and real earnings management, we find that the busyness of audit committee members has a negative impact on earnings quality, suggesting that members with more board seats are less effective monitors of managers’ desire to manipulate earnings. Our findings are especially pronounced in the case of FTSE250 rather than FTSE100 firms. We also find that the detrimental impact of busy audit committees is more pronounced during the financial crisis and, in the case of real earnings management, is not observed afterwards. Our findings raise important questions for corporate governance regulators who have not previously sought to address audit committee busyness and its potential impact on audit committee effectiveness. Our results also emphasise the need for researchers to appreciate the wider economic circumstances in which studies are undertaken, the lack of homogeneity between larger and smaller listed firms, as well as the importance of jurisdiction when undertaking governance-related studies.



  • Business and Economics


  • Business

Published in

Journal of International Accounting, Auditing and Taxation




AM (Accepted Manuscript)

Publisher statement

This paper was accepted for publication in the journal Journal of International Accounting, Auditing and Taxation and the definitive published version is available at [insert DOI link].

Acceptance date







Prof Noel O'Sullivan. Deposit date: 19 October 2021