دانلود رایگان مقاله انگلیسی آیا ارتباط تبادل اجتماعی اثر کمیته حسابرسی را تضعیف می کند؟ - اشپرینگر 2017

Abstract

This research applies the three-tier agency theory and social exchange theory to study the role of audit committees in improving financial reporting quality and reducing the likelihood of earnings restatements. Utilizing a matched sample of restated and non-restated U.S. listed firms between 2002 and 2005, this paper finds that firms with a larger proportion of audit committee members appointed after the CEO are associated with higher incidences of restatements, while the presence of an all-independent nomination committee is associated with a lower likelihood of restatements. The paper also shows that firms whose audit committee members have longer average tenure and receive higher director compensation are associated with a smaller likelihood of restatements. Finally, the paper documents changes in the impact of audit committee characteristics on financial restatements after the enactment of the Sarbanes–Oxley Act. Overall, our results suggest that audit committees’ effectiveness in supervising financial reporting quality is affected by social exchange processes and the broad social context.

6 Discussions and conclusion

This study advances corporate governance literature by applying the three-tier agency model and social exchange theory to study the effectiveness of audit committees in reducing financial restatements and improving financial reporting quality. We argue that social exchange relationships in the three-tier hierarchy between audit committee members (the supervisor), top management (the agent), and shareholders (the principal) affect motivations and decisions of committee members, and in turn influence the effectiveness of audit committees in supervising a firm’s financial reporting process. Using financial restatement data for a sample of U.S. listed firms during the post-SOX period of 2002–2005, we find that firms with a greater proportion of audit committee members appointed after the CEO are associated with a larger likelihood of restatements, while the presence of an allindependent nominating committee helps reduce the incidence of restatements. In addition, firms whose audit committee members have longer tenure and receive higher fees are less likely to engage in restatements. Our paper thus extends extant empirical studies on financial reporting quality to explicitly investigate how audit committees’ monitoring effectiveness may be affected by interpersonal influence and social exchange processes in a three tier principal-supervisor-agent hierarchy.

From a theoretical standpoint, our paper explicitly utilizes behavioral theory of corporate governance to investigate effectiveness of audit committees in improving financial reporting quality and protecting shareholder interests. A common critique of the agency theory is that it ignores the relational aspect of the interaction between principals and agents but only focus on explicit contract designs (Wiseman et al. 2012). The behavioral theory of corporate government in contrast enables us to consider the agency relationship under a broader social context by explicitly taking into account ‘‘socially situated agency’’ and ‘‘socially constituted agency’’ in the term of Westphal and Zajac (2013). Specifically, our paper indicates that social exchange relationships not only affect motivations of agents (managers) but also those of supervisors (audit committees) in the three-tier agency framework.