The Impact of Audit Committee Information Technology Expertise on the Reliability and Timeliness of Financial Reporting

59 Pages Posted: 30 Aug 2019

See all articles by Musaib Ashraf

Musaib Ashraf

University of Arizona, Department of Accounting

Paul N. Michas

University of Arizona - Eller College of Management

Dan Russomanno

University of Arizona - Eller College of Management

Multiple version iconThere are 2 versions of this paper

Date Written: August 22, 2019

Abstract

We examine whether information technology expertise on audit committees impacts the reliability and timeliness of financial reporting. We find a reduction in the likelihood of material restatements and information technology-related material weaknesses (which account for 55 percent of all reported material weaknesses), and more timely earnings announcements at firms with audit committee information technology expertise. These findings are robust to controlling for a firm’s other information technology attributes as well as when using entropy balanced samples, and we mitigate endogeneity concerns with evidence that our findings hold in a sub-sample of firms that all possess overall high-quality information technology. Finally, a difference-in-differences analysis, inclusion of firm fixed effects, and a falsification test largely support our assertion that the quality of financial reporting is significantly improved by the presence of an audit committee information technology expert.

Keywords: audit committee, board of directors, corporate governance, information technology, financial reporting reliability, financial reporting timeliness

JEL Classification: M41, M15

Suggested Citation

Ashraf, Musaib and Michas, Paul N. and Russomanno, Dan, The Impact of Audit Committee Information Technology Expertise on the Reliability and Timeliness of Financial Reporting (August 22, 2019). Available at SSRN: https://ssrn.com/abstract=3441789 or http://dx.doi.org/10.2139/ssrn.3441789

Musaib Ashraf

University of Arizona, Department of Accounting ( email )

Tucson, AZ
United States

Paul N. Michas (Contact Author)

University of Arizona - Eller College of Management ( email )

Tucson, AZ 85721
United States

Dan Russomanno

University of Arizona - Eller College of Management ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States

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