Discussion of Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?

摘要

DHH present timely and relevant information that is linked to a key provision of SOX relating to disclosures of the composition of audit committees of listed companies. DHH successfully explore their stated goal to "test whether market participants react favorably when firms announce the appointment of a financial expert to their audit committee" (p. 2). Readers should be cautious in DHH's interpretation throughout their study that the findings suggest that appointing a financial expert to the audit committee improves corporate governance. This interpretation appears to be a bit strong on two dimensions. First, the results document abnormal market returns that capture the market's perception of value associated with audit committee appointments at the time of the announcement—the market reaction is an expectation of value enhancement, not a direct measure of actual or ultimate improvements associated with the appointment. Second, the statement attributes positive average market returns to improved corporate governance despite being unable to rule out an alternative explanation associated with the potential signal value of certain types of audit committee member appointments. Nonetheless, the documented significant and positive average abnormal returns surrounding the announcement of accounting financial experts for firms with high corporate governance scores is an interesting and robust result. Furthermore, the results highlight the likely interactive role of various governance mechanisms. Many studies explore aspects of governance mechanisms; however, few studies directly probe the interactive roles of various governance mechanisms. DHH highlight the importance of considering together the multiple dimensions of governance as potential substitutes for and complements to each other.