Audit committee effectiveness and integrated reporting quality: Does family ownership matter?

• Published in: Cogent economics & finance 2024-12, Vol.12 (1)
• Main Authors: Qaderi, Sumaia Ayesh, Ali Ghaleb, Belal, Qasem, Ameen, Waked, Sami Sobhi Saleem
• Format: Article
• Language: English
• Subjects: Annual reports; audit committee effectiveness; Audit committees; Audits; Companies; Corporate governance; family ownership; integrated reporting; International Financial Reporting Standards; Malaysian market; Moderation; Ownership; Scrutiny; Stakeholders; Sustainability reporting; Transparency
• ISSN: 2332-2039; 2332-2039
• DOI: 10.1080/23322039.2023.2291893

With the increasing demand for greater financial and sustainability reporting transparency, firms globally have embraced integrated reporting (IR). However, little is known about how audit committee effectiveness (ACE) affects IR quality and whether family ownership moderates this relationship. This study aims to address this research gap by examining the impact of ACE on IR quality in the Malaysian market. In addition, the study further examined the moderating role of family ownership on this relationship. Data are extracted from firms' annual reports and Thomson Reuters DataStream to analyse Malaysian firms spanning the period 2017-2021. Our findings indicate that ACE positively influences IR quality, fostering more transparent disclosure. Additionally, our analysis reveals a negative moderation effect by family ownership on the ACE-IR quality nexus. Further scrutiny of a sub-sample suggests a positive ACE-IR quality relationship in firms without family ownership, contrasting with a negative relationship in those with family ownership. Our results withstand alternative measures of IR, ACE, estimation techniques, and control for endogeneity issues. This research contributes to the literature on IR by adding new insights into the impact of ACE and family ownership on IR quality and provides important implications for regulators, stakeholders, researchers, managers, and investors.