Audit Committee Effectiveness and Financial Information Quality: Evidence from Tunisia

The study investigates the impact of audit committee effectiveness on financial information quality among Tunisian listed companies. We suggest to construct an index for audit committee effectiveness. We assess financial information quality through discretionary accruals and accounting restatement. Findings put in evidence that audit committee effectiveness is based on two main dimensions, namely control of risks and monitoring information communication. Empirical results report that audit committee effectiveness contributes to less earnings management in financial companies and less accounting restatement in non-financial peers. Such a result might reveal that Tunisian audit committees at this time are in an embryonic phase and can explain the ineffectiveness of audit committees. On the other hand, the presence of a Big 4 audit company cannot provide any guarantee for good financial reporting quality as financial companies that are audited with a Big 4 have more discretionary accruals, and hence more opportunistic management behavior. The study also confirm that firm size incites Tunisian managers to pursue opportunistic accrual earnings management.