The Relationship Between The Characteristics Of The Board Of Directors And The Audit Committee With The Disclosure Of Internal Control Information In Thailand’s SET 100
Keywords:
Board of Directors, Audit Committee, Disclosure of Internal Control InformationAbstract
The objective of this research is twofold: 1). to study the characteristics of internal control disclosure, and 2). to analyse the relationship between the characteristics of the board of directors and audit committee with internal control disclosure of companies registered in the Stock Exchange of Thailand. The study utilises data from the annual reports (Form 56-1) between 2016 and 2020 of 415 sample companies. Two research instruments were employed: a checklist for verifying and collecting internal control disclosure characteristics, and an analysis of the board of directors and audit committee characteristics in relation to internal control disclosure using multiple regression analysis.
The research findings reveal the following: 1). Characteristics of Internal Control Disclosure: a). Financial risk reporting data is the most disclosed aspect. b). Responsibility towards the internal control system follows. c). Internal control measures are the least disclosed. 2). Relationships with Board and Audit Committee: a). There is a positive relationship between the size of the board of directors and the audit committee size with internal control disclosure. b). Conversely, companies with the highest executives paired with the chairman of the board tend to disclose less information on internal control. 3). Non-Significant Findings: a). The research did not reveal any relationship between international board of directors, female board of directors, independent directors, financial and accounting executives, audit committee meetings, audit firms, and internal control disclosure.
References
Abbott, J. L., Parker, S., & Peters, G. F. (2004). Audit committee characteristics and restatements. Auditing, 23(1), 69-87.
Adams, R. & Mehran, H. (2012). Bank board structure and performance: Evidence for large bank holding companies. Journal of Financial Intermediation, 21(2), 243-267
Adams, R. B. & Ferreira, D. (2008). Women in the boardroom and their impact on governance and performance. https://ssrn.com/abstract=1107721
Agyei-Mensah, B.K. (2016). Internal control information disclosure and corporate governance: evidence from an emerging market, Corporate Governance. The International Journal of Business in Society, 16(1), 79-95.
Ahmad, R.A.R., Abdullah, N., Jamel, N.E.S.M., & Omar, N. (2015). Board characteristics and risk management and internal control disclosure level: evidence from Malaysia. Procedia Economics and Finance, 31(1), 601-610.
Amran, A., & Devi, S. S. (2008). The impact of board and audit committee characteristics on voluntary disclosures. The Journal of Applied Accounting Research, 9(2), 145-160.
Ashbaugh-Skaife, H., Collins, D.W., & Kinney, W.R. (2007). The discovery and reporting of internal control deficiencies prior to SOX-mandated audits. Journal of Accounting and Economics, 44(1/2), 166-192.
Bronson, S.N., Carcello, J.V., & Raghunandan, K. (2006). Firm characteristics and voluntary management reports on internal control. Journal of Practice and Theory, 25(1), 25-39.
Burns, N., & Grove, S. K. (1993). Study the practice of nursing research: Conduct, critique & utilization. 4^{th} edition. W. B. Saunders Company: Philadelphia.
Carter, D. A., D'Souza, F. P., Simkins, B. J., & Simpson, W. G. (2010). The Diversity of corporate board committees and financial performance.
https://ssrn.com/abstract=1106698 or http://dx.doi.org/10.2139/ssrn.1106698
Choi, J. H., & Wong, T. J. (2007). Does Board independence matter in firms with a controlling shareholder? Journal of Financial and Quantitative Analysis, 42(4), 941-962.
COSO. (2013). The 2013 COSO framework & SOX compliance: One approach to an effective transition. http://www.coso.org
Deumes, R., & Knechel, W.R. (2008). Economic incentives for voluntary reporting on internal risk management and control systems. Journal of Practice and Theory, 27(1), 35-66.
Doyle, J., Ge, W., & Mcvay, S. (2007). Determinants of weaknesses in internal control over financial reporting. Journal of Accounting and Economics, 44(1/2), 193-223.
Elzahar, H., & Hussainey, K. (2012). Determinants of narrative risk disclosures in UK interim reports. The Journal of Risk Finance, 13(2), 133-147.
Fama, E. F. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88(2), 288–307.
Fama, E., & Jensen, M. (1983). Separation of ownership and control. Journal of Law and Economics, 26(1), 301-326.
Firth, M. F. (2007). Ownership, two-tier board structure and the informativeness of earnings-evidence from China. Journal of Accounting and Public Policy, 26(4), 463-496.
Gul, F. A., & Leung, S. (2004). Board leadership, outside directors' expertise and voluntary corporate disclosures. Journal of Accounting and Public Policy, 23(5), 351-379.
Haniffa, R.M., & Cooke, T.E. (2002), Culture, corporate governance and disclosure in Malaysian corporations. Abacus, 38(3), 317-349.
Haniffa, R.M., & Cooke, T.E. (2005). The impact of culture and governance on corporate social reporting. Journal of Accounting and Public Policy, 24(5), 391-430.
Hoitash, U., Hoitash, R., & Bedard, J.C. (2009). Corporate governance and internal control over financial reporting: a comparison of regulatory regimes. The Accounting Review, 84(3), 839-867.
Hooghiemstra, R., Hermes, N., & Emanuels, J. (2015). National culture and internal control disclosures: a cross-country analysis. Corporate Governance: An International Review, 23(4), 357-377.
Huang, H., Yu, Z., Zhang, S., Liang, X., Chen, J., Li, C., Ma, J., & Jiao, R. (2010). Drosophila CAF-1 regulates HP1-mediated epigenetic silencing and pericentric heterochromatin stability. Journal of cell Science, 123(16), 2853-2861.
Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(1), 305-360.
Jianfei Leng & Yiran Ding. (2011). Internal control disclosure and corporate governance: Empirical research from Chinese Listed Companies. Scientific Research An Academic Pubisher, 2(4), 286-294
Jizi, M. I., Salama, A., & Dixon, R. (2014). Corporate governance and corporate social responsibility disclosure: Evidence from the US banking sector. Journal of Business Ethics, 125(4), 601-615.
Khlif, H., & Samaha, K. (2016). Audit committee activity and internal control quality in Egypt: does external auditor’s size matter?. Managerial Auditing Journal, 31(3), 269-289.
Khurram Ashfaq & Zhang Rui. (2019). The effect of board and audit committee effectiveness on internal control disclosure under different regulatory environments in South Asia. Journal of Financial Reporting and Accounting, 17(2), 170-200.
Ki-Han Chung, Ji-Eun Yu, Myeong-Guk Choi, & Jae-Ik Shin. (2015). The Effects of CSR on Customer Satisfaction and Loyalty in China: The Moderating Role of Corporate Image. Journal of Economics, Business and Management, 3(5), 542-547.
Klein, A. (1998). Firm performance and board committee structure. Journal of Law and Economics, 41(1), 275-303.
Klein, A. (2002). Audit committee, board of director characteristics and earnings management. Journal of Accounting and Economics, 33(1), 375-400.
Krishnan, J. (2005). Audit committee quality and internal control: an empirical analysis. The Accounting Review, 80(2), 649-675.
Madhani, M. P. (2007). Corporate governance from compliance to cometitive advantage. The Accounting World, (8), 26-31.
McColgan, P. (2001). Agency theory and corporate governance: a review of the literature from a UK perspective. Department of Accounting & Finance,University of Strathclyde.
Michelon, G., Bozzolan, S., & Beretta, S. (2015). Board monitoring and internal control system disclosure in different regulatory environments. Journal of Applied Accounting Research, 16(1), 138-164.
Shleifer, A., & Vishny, R. (1997). Large shareholders and corporate control. Journal of Political Economy, 94(2), 461-488.
Spira, L.F., & Page, M. (2003). Risk management: The Reinvention of internal control and the changing role of internal audit. Accounting, Auditing & Accountability Journal, 16, 640-661.
Sridharan, U. V., Caines, W. R., McMillan, J., & Summers, S. (2002). Financial statement transparency and auditor responsibility: Enron and Andersen. International Journal of Auditing, 6(1), 277-286.
Sultana, N. H., & Zhan, V.D. (2015). Audit Committee Characteristics and Audit Report Lag. International Journal of Auditing, 19(2), 72-87.
Sun, Y., Yi, Y., & Lin, B. (2012). Board independence, internal information environment and voluntary disclosure of auditors’ reports on internal controls. China Journal of Accounting Research, 5(2), 145-161.
Suwan Wangcharoendate. (2004). Roles of Accountants as Chief Financial Officers. Naresuan University Journal, 12(2), 51-56.
The Securities and Exchange Commission, Thailand. (2017). Corporate Govermance Code for listed companies 2017. Retrieved from https://www.cgthailand.org.
Van De Poel, K., & Vanstraelen, A. (2011). Management reporting on internal control and accruals quality: insights from a comply-or-explain, internal control regime. Journal of Practice and Theory, 30, 181-209.
Warangkanang Sakulwong Lee Yan, Pattanant Petchchedchoo, & Siridech Kumsuprom. (2021). The Relationship between Financial Restatements and Corporate Governance Mechanisms. Journal of Federation of Accounting Professions, 9, 50-71.
Warangkanang Sakulwong Lee Yan, & Thanasarn Wasun. (2020). Transformation in Internal Audit 4.0. Journal of Federation of Accounting Professions, 2, 76-91.
Xiaowen, S. (2012). Corporate characteristics and internal control information disclosure-evidence from annual reports in 2009 of listed companies in Shenzhen stock exchange, Physics Procedia, 25, 630-635.
Xie, B. W. (2003). Earnings management and corporate governance: The role of the board and the audit committee. Journal of Corporate Finance, 9, 295-316.
Yangyang Chen, W. Robert Knechel, Vijaya Bhaskar Marisetty, Cameron Truong & Madhu Veeraraghavan. (2017). Board independence and internal control weakness: Evidence from SOX 404 Disclosures. Journal of Practice & Theory, 36(2), 45–62.
Yut Worachatthan. (2012). The Dynamic Capital Market Frontier. Money and Wealth,10(113),
Zahra, S.A., & Stanton, W.W. (1988). The implications of board of directors composition for corporate strategy and performance. International Journal of Management, 5, 229-236.
Zhang, Y., Zhou, J., & Zhou, N. (2007). Audit committee quality, auditor independence, and internal control weaknesses. Journal of Accounting and Public Policy, 26(3), 300-327.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Journal of Accountancy and Management
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
บทความที่ได้รับการตีพิมพ์เป็นลิขสิทธิ์ของวารสารการบัญชีและการจัดการ
ข้อความที่ปรากฏในบทความแต่ละเรื่องในวารสารวิชาการเล่มนี้เป็นความคิดเห็นส่วนตัวของผู้เขียนแต่ละท่านไม่เกี่ยวข้องกับมหาวิทยาลัยมหาสารคาม และคณาจารย์ท่านอื่นๆในมหาวิทยาลัยฯ แต่อย่างใด ความรับผิดชอบองค์ประกอบทั้งหมดของบทความแต่ละเรื่องเป็นของผู้เขียนแต่ละท่าน หากมีความผิดพลาดใดๆ ผู้เขียนแต่ละท่านจะรับผิดชอบบทความของตนเองแต่ผู้เดียว
