Shareholder Elections of Audit Committee Members

47 Pages Posted: 1 Mar 2013 Last revised: 24 Feb 2018

See all articles by Ronen Gal-Or

Ronen Gal-Or

Bentley University - Department of Accountancy

Rani Hoitash

Bentley University - Department of Accountancy

Udi Hoitash

Northeastern University - Accounting Group

Date Written: August 25, 2017

Abstract

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

Gal-Or, Ronen and Hoitash, Rani and Hoitash, Udi, Shareholder Elections of Audit Committee Members (August 25, 2017). Auditing: A Journal of Practice & Theory, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2226565 or http://dx.doi.org/10.2139/ssrn.2226565

Ronen Gal-Or

Bentley University - Department of Accountancy ( email )

175 Forest Street
Waltham, MA 02452
United States

Rani Hoitash (Contact Author)

Bentley University - Department of Accountancy ( email )

175 Forest Street
Waltham, MA 02452-4705
United States

Udi Hoitash

Northeastern University - Accounting Group ( email )

360 Huntington Ave.
Boston, MA 02115
United States
671-373-5839 (Phone)

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