The Association between Religious College or University Affiliation of Audit Committee Members and Financial Reporting Risk

• In Event: Forensic & Investigative Accounting and Audit

Abstract

This study examines the association between Audit Committee member affiliation with religious academic institutions and financial reporting risk. Results of the study provide support for the hypotheses that companies in with a greater influence of audit committee members that are affiliated with a religious college or university are associated with lower abnormal audit fees. In addition, we find that organizations with a greater percentage of audit committee members affiliated with religious academic institutions are associated with lower likelihood of restatements. We extend recent accounting literature related to the impact of religion on accounting reporting by McGuire et al. (2012) by using a more direct measure of religious influence while controlling for their indirect measure of religious affiliation based on geographical measures of religious affiliation of the community near the company headquarters location. The results of the study indicate that organizations with higher levels of oversight by individuals affiliated with religious academic institutions are associated with lower financial reporting and audit risk.

Authors

• Jared Scott Soileau, Louisiana State University

• Yu Chen, Texas A&M International University