دانلود رایگان مقاله انگلیسی خبرگی حسابداری کمیته حسابرسی، قدرت مدیرعامل و قیمت گذاری حسابرسی - تیلور و فرانسیس 2017

ABSTRACT

The Sarbanes–Oxley Act of 2002 (SOX) mandates that all listed firms disclose whether they have a financial expert on the audit committee, highlighting the committee’s expertise. However, some argue that non-accounting financial experts, compared to accounting financial experts, are not sufficient to ensure audit committee effectiveness because the former lack accounting knowledge. Accounting experts on audit committees may require higher audit efforts, while auditors may assess audit committees with accounting financial experts as effective, decreasing audit efforts. This paper first inspects the effect of audit committee accounting expertise on audit fees as a proxy for audit efforts, and then investigates whether the effect is moderated by powerful CEOs. Using post-SOX period data, our results show that, on average, firms with accounting experts on audit committees are more likely to pay higher audit fees, and the effect is less pronounced when a powerful CEO manages a firm.

7. Conclusion

Following a wave of accounting scandals such as Enron executives’ misdeeds, audit committees’ expertise has received unprecedented attention, but with controversy over how the respective expertise is defined. While the current definition embraces not only accounting expertise but also non-accounting financial expertise, previous research has argued that accounting expertise is more relevant with respect to the committee’s oversight role. However, the way in which accounting experts improve financial reporting quality has been neglected. This paper examines the effect of audit committee accounting expertise on audit fees and explores the conditions under which the effect is weakened. Our results suggest that accounting experts demand a more thorough audit process. However, CEOs can hinder audit committee activities, even in the recently strengthened corporate governance and regulatory environments.

Our findings have several implications for policy-makers and regulators who initially required a stricter definition of financial expert (accounting experts only) but later broadened the definition. By showing that financial experts with accounting experience have a positive effect on audit fees, this paper raises doubt regarding whether the definition’s expansion was appropriate. In addition, our paper simultaneously incorporates audit committee and CEO characteristics in audit fee setting. Regulatory bodies and exchange markets have designed policies to curb CEO influence on financial reporting. However, our results raise public awareness of the continuing risk of the CEO’s potential influence on the audit committee by warning that audit committee effectiveness may still potentially be impaired by the CEO.