The influence of audit committee characteristics on modified audit opinion in Thailand

Abstract

The purpose of this research was to study the characteristics of the audit committee to reduce the company's chances of receiving modified audit opinions from the audit. This study used the data from the annual reports of the companies listed on the Stock Exchange of Thailand between the year 2015 to 2018. The data used were the audit committees and modified audit opinions of 211 companies consisted of 92 industrial product companies and 119 companies in service provider category. The variable data were analyzed by using descriptive statistics and inferential statistics, then the logistic regression correlation analysis, Pearson correlation matrix, and logistic regression analysis were used to test the hypotheses. The independent variables were audit committee characteristics consisted of the independence, size, number of meetings, and accounting or financial expertise. The dependent variable was the modified audit opinions. The results revealed that the number of meetings of the audit committee was the only variables of the audit committee characteristics that showed a positive correlation with the modified audit opinions. There was no significant relationship between the independence of the audit committee, the audit committee size, the expertise in accounting or finance and the modified audit opinions. The equation of predicting the characteristics of the audit committee which is an important part of corporate governance significantly showed that it had no influence on reducing the chance that the company would receive a modified audit opinion. However, the research results suggested the evidences in policy implications and operation of corporate governance in characteristics of effective audit committee. The audit committee meetings, not only the numbers but also the quality of the meetings should be considered to enhance corporate governance efficacy concerning the quality of financial reports