Boards of Directors, Audit Committees, and the Information Content of Earnings

Weinberg Center for Corporate Governance Working Paper No. 2003-04

41 Pages Posted: 23 Oct 2003

See all articles by Kirsten L. Anderson

Kirsten L. Anderson

Georgetown University - Department of Accounting and Business Law

Stuart Gillan

University of Georgia - Department of Finance

Daniel Deli

Securities and Exchange Commission (SEC)

Date Written: September 2003

Abstract

We examine the relation between the information content of earnings (earnings response coefficients) and board and audit committee structure for a broad sample of more than 1,200 firms during 2001. We find that earnings are more informative the greater is the independence and the activity of the full board. Moreover, firms that have separated the CEO and board Chair positions appear to have more informative earnings. We also find that audit committee characteristics influence the information content of earnings. In particular, firms that have smaller audit committees have more informative earnings. However, we find that audit committee independence incremental to the independence of the full board is unrelated to the information content of earnings.

Keywords: Boards of Directors, Audit Committees, Governance, Earnings Response Coefficient

JEL Classification: G12, G34, M41, M49

Suggested Citation

Anderson, Kirsten L. and Gillan, Stuart L. and Deli, Daniel, Boards of Directors, Audit Committees, and the Information Content of Earnings (September 2003). Weinberg Center for Corporate Governance Working Paper No. 2003-04. Available at SSRN: https://ssrn.com/abstract=444241 or http://dx.doi.org/10.2139/ssrn.444241

Kirsten L. Anderson

Georgetown University - Department of Accounting and Business Law ( email )

McDonough School of Business
Washington, DC 20057
United States
202-687-3798 (Phone)
202-687-4031 (Fax)

HOME PAGE: http://msbonline.georgetown.edu/faculty-research/msf-faculty/kirsten-anderson

Stuart L. Gillan (Contact Author)

University of Georgia - Department of Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States

Daniel Deli

Securities and Exchange Commission (SEC)

450 Fifth Street, NW
Washington, DC 20549-1105
United States

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