Public Listed Companies and Fund Managers - Academic ...

Financial expertise and
literacy
Mo’taz Amin Al –Sa’eed
.148 .131 .115 1.131 .261
Compliance with JSC .319 .120 .256 2.672 .009
Audit quality .243 .068 .256 3.603 .000
Understanding of AC's .243 .093 .186 2.620 .010
Stepwise analysis
By using the Stepwise analysis to evaluate the AC features, to determine the manner in which they
influence the financial reporting, it shows in table (4) that the most independent variable which
effectively influences the financial reporting was the compliance with JSC requirements with (R =
0.666). This result supporting that the JSC Requirements are lined and complied with the
requirements of the Institute of Internal Auditors, International Standards on Auditing, and principles of
corporate governance. Those standards require the share-traded companies to establish audit
committees to oversight the financial reporting process as a function and responsibility of the
management.
Table 4: Variables evaluation through stepwise analysis and regression
Adjusted R Std. Error of the
Variables R R Square Square Estimate
Compliance with JSC Requirements .666 a .444 .438 .33515
Audit Quality .738 b .545 .537 .30440
Internal Control Effectiveness .761 c .580 .568 .29400
Understanding of AC's Functions .782 d .611 .597 .28409
Multicollinearity Test:
Variance Inflationary Factor (VIF) was used to test the multicollinearity of the variables; this test was
used to verify that each independent variable is independent from other independent variables. It was
found (see table (5)) that VIF < 5, so that there is no multicollinearity which means that the model
used in this research is correct.
Table 5: Multicolleniarity test for independent variables
Collinearity Statistics
Independent Variables Tolerance VIF
Internal Control Effectiveness .536 1.867
Financial Expertise and Literacy .357 2.798
Compliance with JSC Requirements. .404 2.478
Audit Quality .732 1.367
Understanding of AC's Functions .734 1.363
7. Conclusions and recommendations
The research results show that our respondents have good level of education and experience. The
research results also show that there is a relationship between internal control effectiveness, financial
expertise and literacy, Jordan securities commission requirements, audit quality, understanding of
audit committee functions (Independent variables), and financial reporting (dependent variable). In
addition to that; provided by Stepwise analysis in order to evaluate the AC's features and the manner
in which they influence the financial reporting; we found that the compliance with JSC requirements
(R=0.666) has been evaluated as the most effective feature that influence the financial reporting in the
Jordanian share-traded companies. Audit quality, internal control effectiveness, and understanding of
AC's functions are coming next respectively. These results are in line with prior studies (Sori, et al.
2009), (Siti Saad, et al. 2009), ((Bedard and Gendron. 2009). (Bedard and Gendron, 2009) provide that
higher AC competencies are positively associated with higher audit fees, greater auditor
independence and selection of a higher quality auditor. In addition, the research result shows that the
internal control effectiveness, financial expertise and literacy, Jordan securities commission
requirements, audit quality, and understanding of audit committee functions can explain a significant
amount of variance in financial reporting. In other words, if internal control effectiveness, financial
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