Evidence on the relation between audit committee characteristics and the quality of financial reporting.

摘要

Audit committees have been asked to take on significant new responsibilities during the past decade. Many have expressed concern that audit committees cannot meet these responsibilities effectively because they lack the expertise, motivation, and time necessary to do so. This dissertation empirically investigates whether there is a relationship between the collective professional characteristics (competence, motivation, and time availability) of a firm's audit committee members and analysts' ratings of the quality of the firm's financial reporting. A sample of 100 firms taken from the Association for Investment Management Research's Annual Review of Corporate Reporting Practices 1995--96 was studied. Company proxy statements filed with the Securities & Exchange Commission were used to identify audit committee members and obtain brief work histories. More extensive work histories and biographical data was obtained from databases, books and other sources.;No significant relationships were found between higher levels of competence, motivation, and time available, and high quality financial reporting. However, the findings do suggest that firms with high quality financial reporting have audit committees with more experienced members either as a Chief Executive Officer, or as a board member elsewhere than do firms with low quality financial reporting.