Audit Committee Members' Social Identities and Corporate Governance Roles: Evidence from IPOs

• In Event: Individual Auditor Effects on Audit Quality

Abstract

I propose that audit committee members’ professional experiences lead to the development of social identities, which include internalized beliefs, norms, and expected actions that affect the corporate governance roles these individuals assume. Within this conceptual framework, I examine whether audit committee members’ social identities are associated with the quality of monitoring performed by the overall audit committee. I track IPO companies and examine the association between audit committee members’ social identities as developed through experience in public accounting, executive management (e.g., CEO), financial management (e.g., CFO), and investment management (e.g., venture capital) and the subsequent quality of financial reporting monitoring. My results suggest that audit committee members’ social identities and related corporate governance roles do influence monitoring quality. Furthermore, the results imply that professional experiences typically associated with financial expertise do not provide similar levels of audit committee monitoring effectiveness.

Author

• Kara Obermire, Oregon State University