Board and Monitoring Committee Independence
22 Pages Posted: 21 Sep 2003
Abstract
This study focuses on the composition of boards of directors and their monitoring committees (audit and compensation) for large Australian companies. For firms whose boards use a committee structure, much of the monitoring responsibility of the board is expected to rest with the independent committee members. We document a positive association between the proportion of independent directors on the full board and its monitoring committees, and a greater proportion of independent directors on both audit and compensation committees than the full board. Our hypotheses tests involve an examination of the impact of other mechanisms used to control agency conflicts on full board and committee independence, and the association between this independence and firm value. We find that full board independence is associated with low management ownership and an absence of substantial shareholders. Audit committee independence is associated with reduced monitoring by debtholders when leverage is low. While we predict a positive relationship between board and monitoring committee independence and firm value, our results do not support this conjecture.
JEL Classification: G34, G32, M41, M49
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Audit Committee, Board of Director Characteristics, and Earnings Management
By April Klein
-
Audit Committee, Board of Director Characteristics, and Earnings Management
By April Klein
-
Audit Committee Composition and Auditor Reporting
By Joseph V. Carcello and Terry L. Neal
-
Corporate Governance and Accounting Scandals
By Anup Agrawal and Sahiba Chadha
-
Audit Committee Characteristics and Auditor Reporting
By Joseph V. Carcello and Terry L. Neal
-
Earnings Management and Corporate Governance: The Roles of the Board and the Audit Committee
By Biao Xie, Wallace N. Davidson, ...
-
Restoring Trust after Fraud: Does Corporate Governance Matter?
-
Board Characteristics, Accounting Report Integrity, and the Cost of Debt
By Ronald C. Anderson, Sattar Mansi, ...
-
Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?
By Mark L. Defond, Rebecca N. Hann, ...
-
Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?
By Mark L. Defond, Rebecca N. Hann, ...