Audit committee composition and effectiveness: a review of post-SOX literature

Malik, Mahfuja

doi:10.1007/s00187-014-0188-4

Cited by 23 publications

(10 citation statements)

References 65 publications

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“…This additional test answers the call suggested by Malik (2014) and Velte (2017) that AC share ownership needs to be examined further with regard to the monitoring process from an international perspective. Based on agency theory, Jensen and Meckling (1976) state that it is acceptable for directors to possess a percentage value of a company's shares to motive them to align their interest with the interest of other stakeholders and to serve as a management monitor on behalf of shareholders.…”

Section: Impact Of Ac Share Ownership On Fldmentioning

confidence: 56%

Disclosure quality vis-à-vis disclosure quantity: Does audit committee matter in Omani financial institutions?

Lawati

Hussainey

Sagitova

2021

Rev Quant Finan Acc

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We examine the impact of audit committee (AC) characteristics (e.g. AC foreign members, AC female members, AC members with multiple directorships, AC members with share ownership and AC with financial and supervisory expertise) on forward-looking disclosure (FLD) quality and quantity. Using a sample of Omani financial companies listed on Muscat Securities Market over a five-year period (2014–2018), we find that a number of AC characteristics (such as AC size, AC female members and AC with multiple directorships) improve FLD quality. We make no such observation for FLD quantity. The results suggest that the responsibility of AC extends to improving the quality of FLD. We provide an additional analysis on the impact of AC effectiveness (ACE) on FLD quality, which suggests that companies’ compliance with CG code is beneficial for disclosure quality. We also find that the impact of ACE on FLD quality is influenced by corporate performance, leverage and the quality of external auditors. Our findings carry implications for the regulatory bodies’ efforts in encouraging companies to improve disclosure quality by considering AC characteristics as well as appointing more effective AC directors.

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Section: Impact Of Ac Share Ownership On Fldmentioning

confidence: 56%

Disclosure quality vis-à-vis disclosure quantity: Does audit committee matter in Omani financial institutions?

Lawati

Hussainey

Sagitova

2021

Rev Quant Finan Acc

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“…On the one hand, a greater level of financial expertise in audit committees enforces corporate reporting (Bilal, Chen, & Komal, 2018). On the other hand, higher financial expertise in audit committees provides an opportunity for poor financial corporate reporting (e.g., Malik, 2014). Under these situations, this paper argues that regulatory reviewers rely more on financial expertise when audit committees are independent.…”

Section: Introductionmentioning

confidence: 90%

Audit Committee and Regulatory Scrutiny

2022

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This paper examines the relationship between audit committee characteristics and regulatory scrutiny. Comment letters issued by the Securities and Exchange Organization of Iran were used to measure regulatory scrutiny. Empirical results show that audit committee financial expertise increases (decreases) regulatory scrutiny when audit committee independence is low (high). This paper informs the cost-benefit debate on audit committee financial expertise. It contributes to the literature by showing that regulatory scrutiny is jointly influenced by the audit committee independence and financial expertise. The paper is of interest to researchers and shareholders, boards of directors, and other practitioners who wish to improve the composition and quality of audit committees, especially in emerging markets where corporate governance codes are still developing.

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“…To gain an adequate level of comparability within the included studies, we only include archival studies as the dominant research method in this research topic and focus on European settings. We capture a growing number of meta-analyses and literature reviews on AC and its impact on firm outputs (Malik, 2014;Ghafran and O'Sullivan, 2013;DeZoort et al, 2002;Turley and Zaman, 2004). We summarize the relevance of our study and our contribution to the literature as follows: as archival AC research dominates the US-American, setting prior literature reviews mainly relied on the US-American setting or neglected a closer differentiation of several regimes.…”

Section: Introductionmentioning

confidence: 99%

Which attributes of audit committees are most beneficial for European companies? Literature review and research recommendations

Velte¹

2023

JGR

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Purpose This paper aims to review 68 archival studies on the impact of audit committees (ACs) on firms’ consequences [(non)financial reporting, performance and audit quality] in European firms. Design/methodology/approach Applying a stakeholder agency-theoretical framework, the author differentiates between three categories of AC variables: presence; composition; and resources, incentives and diligence. Findings The author finds that AC composition, (non)financial reporting and audit quality are dominant in the literature review. Other inputs or outputs are either too low in amount or yielded heterogeneous results, hindering clear tendencies. However, there are indications that financial expertise is positively related to financial reporting and audit quality, in line with agency theory and European regulatory assumptions. Research limitations/implications In the discussion of potential future research, the author emphasizes, among others, the need for the recognition of innovative and sustainable AC variables, inclusion of moderator and especially mediator variables and reaction to endogeneity concerns by advanced regression models. Practical implications As the European Commission currently discusses extended regulations on AC duties and composition, this literature review highlights the huge impact of financial expertise on financial reporting and audit quality. In view of the increased monitoring duties of sustainability reporting, both business practices and regulatory bodies should increase the sustainability expertise of ACs. Originality/value This analysis makes useful contributions to prior research by focusing on attributes of AC and their impact on firms’ outputs in the European capital market, based on a differentiation between mandatory one-tier/two-tier systems and the choice model. The findings support the promotion of European evidence-based regulations, such as the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive.

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Audit committee composition and effectiveness: a review of post-SOX literature

Cited by 23 publications

References 65 publications

Disclosure quality vis-à-vis disclosure quantity: Does audit committee matter in Omani financial institutions?

Disclosure quality vis-à-vis disclosure quantity: Does audit committee matter in Omani financial institutions?

Audit Committee and Regulatory Scrutiny

Which attributes of audit committees are most beneficial for European companies? Literature review and research recommendations

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