The Audit Committee: A Gatekeeper for Effective Corporate Governance

47 Pages Posted: 22 Nov 2012 Last revised: 25 Nov 2012

See all articles by Yousouf Hansye

Yousouf Hansye

London School of Economics & Political Science (LSE) - London School of Economics

Date Written: August 31, 2012

Abstract

In recent years, much attention has focused on the role of the corporate audit committee within corporate governance in the wake of several high profiles corporate financial debacles, such as Maxwell, Polly Peck and BCCI Bank in the UK, Enron and WorldCom in the US, and Parmalat in Italy. The value of strong corporate governance has assumed a critical role in organisations since these highly publicised corporate scandals. Regulations have been introduced in most countries around the world to enhance the functioning of audit committees as a device for strengthening good corporate governance to avoid future accounting fiascos. This paper posits that arguably only an audit committee that is independent (e.g., comprised solely of outside directors), active (e.g., meeting frequently) and with members possessing financial expertise can contribute to effective corporate governance.

Keywords: Audit committee (AC), Corporate governance (CG), Independence, Financial reporting and Earnings management (EM)

Suggested Citation

Hansye, Yousouf, The Audit Committee: A Gatekeeper for Effective Corporate Governance (August 31, 2012). Available at SSRN: https://ssrn.com/abstract=2179389 or http://dx.doi.org/10.2139/ssrn.2179389

Yousouf Hansye (Contact Author)

London School of Economics & Political Science (LSE) - London School of Economics ( email )

United Kingdom

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