Internal controls over financial reporting requirements and audit committee: Evidence from an event study

The purpose of this study is the event study of internal controls over financial reporting requirements with emphasizing the role of the audit committee. In the event studies, to minimize the effects of other events, the impact of an event in a short period of time before and after the event is studied. In this context, the present study, examines the impact of the adoption of internal controls instruction as well as the formation of audit committee on quality of financial reporting, including reliability, relevance and timeliness. The results of the survey of 203 companies in Tehran Stock Exchange during the years 1390 to 1391 shows that the adoption of instruction improves reliability and relevance. Results also show that increasing the reliability of the audit committee comes to timeliness. Nevertheless, the Audit Committee had no significant effect on the relevance of financial reporting. In addition, the results of path analysis and factor analysis indicate that companies that have not an audit committee, achieve quality of financial reporting by reducing relevance. However, for companies have an audit committee, without reducing the other quality of financial reporting proxies, the relevance is achievable.