The Relationship Between Audit Committee Characteristics and Type of Auditor’s Report (An Empirical Study on the Public Shareholding Industrial Companies Listed at Amman Bourse)

Abstract

The purpose of this study is to analyze the relationship between the possibility of the Company receiving an unqualified auditors’ report (as a measure of the financial reports quality) and the characteristics of the Audit Committees at the Public shareholding Industrial Companies Listed at Amman Bourse. It, took into consideration the regulations of the Corporate Governance Guide issued by the Jordanian Securities Commission. Towards realizing the objectives of the study the relationship was estimated and examined through the Logistic Regression test. Data of 50 companies of the industrial sector for the period 20012006- were arranged in a way that makes it possible to apply the Pooled Data Regression. Other relevant statistical methods were employed including descriptive procedures autocorrelation test, multicollinearity test and heteroskedasticity test. A set of controlling variables was added to the study model to control the relation between the independent variables and the dependent one. Accordingly, results showed the existence of a positive effect of the size of the audit committee, and the financial expertise of its members on the external auditor’s report. On the other hand, a negative effect was proved to exist of the ownership of the members of the audit committee in the company’s equity on the external auditor’s report. At the same time, there was no effect of the standard of independence concerning members of the audit committee on the type of auditors report.