Rethinking audit committee competence: Accreditation, experience, and digital skills in constraining real earnings management

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Abstract

This study examines how audit committee (AC) competencies influence real earnings management (REM) in Malaysian publicly listed companies (PLCs) during a period of significant governance reform (2017 to 2019). Using secondary data from annual reports and financial databases, the analysis revealed that different forms of AC expertise exert divergent effects on financial reporting oversight. Financial expertise associated with Malaysian Institute of Accountants (MIA) membership (ACMIA) consistently constrains REM, highlighting the importance of statutory accreditation, professional ethics, and jurisdiction-specific regulatory knowledge. In contrast, financial expertise without MIA membership (ACFIN) is positively associated with REM, suggesting that technical expertise alone may be insufficient to ensure effective governance when it is not institutionally embedded within the local regulatory environment. Digital competence within the AC (ACDIGI) exhibits a weaker but significant negative relationship with REM, indicating its emerging importance in increasingly digitalised reporting systems. By distinguishing between MIA-accredited and non-MIA financial expertise and introducing digital competence as an additional dimension of AC capability, this study extends agency theory, resource dependence theory, and Masli et al.’s (2018) multidimensional board effectiveness framework. The findings highlight the importance of aligning professional expertise with institutional context and technological capability to strengthen financial oversight and enhance reporting integrity in emerging markets.

Keywords: Audit Committee Competencies, Real Earnings Management, Financial Expertise, Financial Accreditation, Digital Competence

Authors’ individual contributions: Conceptualization—M.A.K.; Methodology—M.AK. and N.A.M.S.; Investigation—M.A.K.; Writing—Original Draft—M.A.K.; Writing—Review & Editing—M.A.K., N.A.M.S., Y.W.L., and F.A.H.; Visualization—M.A.K.; Supervision—N.A.M.S., Y.W.L., and F.A.H.; Project Administration—M.A.K. and N.A.M.S.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G3, M43

Received: 30.10.2025
Revised: 05.03.2026; 07.04.2026
Accepted: 13.04.2026
Published online: 15.04.2026

How to cite this paper: Khalidi, M. A., Mohd Saat, N. A., Lau, Y. W., & Abdul Hamid, F. (2026). Rethinking audit committee competence: Accreditation, experience, and digital skills in constraining real earnings management. Corporate Board: Role, Duties and Composition, 22(2), 8–22. https://doi.org/10.22495/cbv22i2art1