The Relationship between Board Composition and Audit Quality: A Case Study of Thai Listed Companies
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Abstract
A board of directors is placed in the spotlight as corporate financial statements come under greater scrutiny from regulators, investors, and other stakeholders after the occurrence of financial scandals.To strengthen board effectiveness, the Thailand corporate governance code requires the board to review the board structure in terms of size and composition. This study examined the relationship between board composition and audit quality. The sample of this study was non-financial listed companies in Thailand during the period of 2018 to 2022. The data was collected from SETSMART and a company's website for 1,402 companies as firm-year observations. The data was analyzed using SEM. The findings revealed that board composition has a positive relationship with audit quality. As corporate governance is effective; it promotes audit quality effectively. However, the effect of board composition on audit quality may vary depending on company size and audit firm size. Regulators may consider additional factors to improve the good corporate governance principle.
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