Audit Committees and Financial Reporting Quality in Singapore

We examine three characteristics (independence, expertise, and overlapping membership) of audit committees and their impact on the financial reporting quality for Singapore listed companies. The main finding is that financial reporting quality will be higher if audit committees have mixed expertise in accounting, finance and/or supervisory. In addition, we do not find evidence that incremental independence of audit committees enhance financial reporting quality because audit committees already consist of a majority of independent directors. Finally we fail to find any impact of overlapping membership on audit and remuneration committees on financial reporting quality. Overall, the results have policy implications on improving corporate governance effectiveness in terms of financial reporting quality.

Keywords: Corporate Governance; Audit Committee; Independence; Expertise; Overlapping Membership; Financial Reporting Quality

JEL Classification: G34; M41

Suggested Citation: Suggested Citation

Kusnadi, Yuanto and Leong, Kwong Sin and Suwardy, Themin and Wang, Jiwei, Audit Committees and Financial Reporting Quality in Singapore (July 17, 2014). Journal of Business Ethics, Forthcoming, Singapore Management University School of Accountancy Research Paper No. 2015-29, Available at SSRN: https://ssrn.com/abstract=2467456 or http://dx.doi.org/10.2139/ssrn.2467456