Do Greater Audit Committee Responsibilities Enhance Corporate Governance?

• In Event: Audit Committee Expertise and Responsibilities

Abstract

Audit committee responsibilities have been increasing over the past two decades, causing some practitioners to warn that overloading audit committees can impair their effectiveness. Using a new measure of audit committee oversight activity based on the length of audit committee charters, we examine how the level of audit committee oversight is associated with financial reporting, internal control, and auditing outcomes. Using our charter-based measure, we provide evidence that audit committee oversight is positively associated with the quality of financial reporting, internal control, and auditing. Our research provides empirical evidence that increasing the scope of audit committee oversight benefits corporate governance.

Authors

• Jacob Jaggi, University of Arizona

• Musaib Ashraf, University of Arizona-Tucson

• Preeti Choudhary, University of Arizona-Tucson