The Relationship between Board Characteristics and Voluntary Improvements in Audit Committee Composition and Experience

Posted: 26 Jul 2001

See all articles by Mark S. Beasley

Mark S. Beasley

North Carolina State University

Steven Salterio

Queen's University - Smith School of Business

Multiple version iconThere are 2 versions of this paper

Abstract

This study empirically examines the relation between certain board of director characteristics and the extent that audit committee composition voluntarily exceeds minimum mandated levels and includes outside directors with financial reporting and audit committee knowledge and experience. This study focuses on board characteristics as the board directly controls audit committee membership. Such staffing decisions can directly affect the ability of the audit committee to monitor management's financial reporting process on behalf of the board. Results suggests that Canadian firms which voluntarily include more outside directors on the audit committee than the mandated minimum have larger boards with more outsiders serving on those boards and are more likely to segregate the board chairperson position from the CEO/president positions. Additionally, firms who voluntarily create audit committees composed of outsider members with a breadth of relevant financial reporting and audit committee knowledge and experience have boards that are larger, have more outside members, and are less likely to be chaired by the CEO/president. Implications of these findings for auditors, institutional investors, regulators and other interested parties are discussed.

Keywords: Audit committees; Audit committee composition; Audit committee knowledge and experience; Corporate governance.

JEL Classification: M41, M49, G34

Suggested Citation

Beasley, Mark S. and Salterio, Steven E., The Relationship between Board Characteristics and Voluntary Improvements in Audit Committee Composition and Experience. Contemporary Accounting Research, forthcoming, Available at SSRN: https://ssrn.com/abstract=272852

Mark S. Beasley (Contact Author)

North Carolina State University ( email )

Box 8113
Raleigh, NC 27695-8113
United States
919-515-6064 (Phone)
919-515-4446 (Fax)

Steven E. Salterio

Queen's University - Smith School of Business ( email )

Kingston, Ontario K7L 3N6
Canada
613-533-6926 (Phone)

HOME PAGE: http://smith.queensu.ca/faculty_and_research/faculty_list/salterio-steven.php

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