دانلود رایگان مقاله کمیته حسابرسی، اداره امور شرکت و ثروت سهامداران

abstract

This paper examines the effect of audit committee appointments on shareholder wealth in Korea after the Asian financial crisis. We find that stock prices generally increase with audit committee appointments. In contrast, chaebol (business group) affiliates and firms switching audit committee membership are associated with significantly lower stock returns, probably due to the management’s opportunistic behavior. However, the independence and financial literacy of the audit committee members appear to mitigate the opportunistic behavior. Therefore, our result confirms that the characteristics of the audit committee strengthen or weaken the existing corporate governance. We discuss the implications of our results obtained under Korea’s unique corporate governance structure.

6. Summary and conclusion

In this paper, we examine the effects of audit committee appointments on shareholder wealth in Korea. Our results generally support the positive effect of government-mandated audit committees, enhancing shareholder wealth even in an emerging market where corporate governance is typically weak. We recognize unique features of Korean audit committees and corporate structures – business groups (e.g., chaebols). Korean audit committees conduct operational audits as well as accounting audits. Therefore, it is important to consider membership requirements accordingly when firms appoint audit committee members. Interestingly, we find a strong impact of financial literacy of audit committee members on shareholder wealth, even though financial literacy does not require any accounting background.