Shareholder Elections of Audit Committee Members
47 Pages Posted: 1 Mar 2013 Last revised: 24 Feb 2018
Date Written: August 25, 2017
Voting in directors’ elections is one of few mechanisms by which shareholders can influence corporate governance choices. We study elections of directors who serve on the audit committee (AC), a topic receiving little attention in past work. Our results show that AC members, especially those who do not serve on the compensation or nominating committees, receive greater shareholder support than other independent board members. We further find that among AC members, more qualified members, in terms of accounting expertise, receive greater support while AC chairs without such expertise receive lower support. In addition, when the AC is less effective in monitoring the financial reporting process, its members receive lower shareholder approval, while other independent board members are less affected by these same financial reporting factors. Finally, when the AC is less effective all of its members receive lower support, irrespective of their expertise or position within the committee.
Keywords: Director Elections,Audit Committee,Financial Expertise,Internal Controls,Restatements
JEL Classification: M41, G30
Suggested Citation: Suggested Citation