Causes and Consequences of Variations in Audit Committee Composition

41 Pages Posted: 31 May 2000

See all articles by April Klein

April Klein

New York University (NYU) - Department of Accounting

Multiple version iconThere are 2 versions of this paper

Date Written: April 2000

Abstract

This paper examines and finds systematic economic factors behind variations in audit committee composition. Specifically, audit committee independence is positively related to the informativeness of accounting data in valuation and negatively related to the degree of bargaining power that the CEO commands over the board. In constrast, no systematic relation is found between audit committee composition and the degree of contracting between shareholders and senior claimants. This paper also examines and finds economic benefits of firms having independent audit committees. Specifically, CEO cash compensation and the number of audit committee meetings are negatively (positively) related to audit committee independence, respectively.

JEL Classification: M49, M41, J33, G32

Suggested Citation

Klein, April, Causes and Consequences of Variations in Audit Committee Composition (April 2000). NYU Law and Economics Working Paper No. 00-002, Available at SSRN: https://ssrn.com/abstract=221779 or http://dx.doi.org/10.2139/ssrn.221779

April Klein (Contact Author)

New York University (NYU) - Department of Accounting ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012
United States

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