Meta-Analysis and the Accounting Literature

Download or read book Meta-Analysis and the Accounting Literature written by Bradley Pomeroy and published by . This book was released on 2009 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: We conduct a meta-analysis of the association between audit committee (AC) independence and financial reporting quality (FRQ). Although we cannot reliably aggregate results across studies in a statistical sense because of inconsistencies in defining FRQ and the absence of replication studies, quantitative review techniques yield three conclusions: (1) The use of different FRQ measures in the AC independence literature explains about half of the variation in results across studies. (2) Audit committees are more effective at enhancing audit quality (e.g., through averting going-concern reports and auditor resignations) than they are at fostering financial statement quality (e.g., by making high-quality accruals and avoiding restatements). AC independence can even reduce apparent financial statement quality by identifying the need for restatements and remedial, abnormal accruals. (3) Financial statement quality and audit quality are complementary contributors to FRQ. The statistical and methodological difficulties we encounter lead us to posit that the dearth of MA studies in accounting and auditing stems from similar difficulties in applying MA to other topics. We present evidence consistent with publication biases and perverse researcher incentives being responsible for the difficulties.