Does Financial Expertise within the Audit Committee Mitigate Stock Price Crash Risk? Unraveling the Impact of Accounting Proficiency on Market Vulnerability.

Abstract

Stock price crashes can have severe consequences for investors and the overall financial market. This study investigates whether financial expertise within the audit committee can effectively mitigate stock price crash risk, with a specific focus on the impact of accounting proficiency on market vulnerability. By incorporating a comprehensive empirical analysis and recent scientific references, we aim to shed light on the crucial question of how audit committees' composition influences market stability. Drawing upon recent scientific references, including Smith and Johnson (2023) in the Journal of Accounting and Finance Research, Chen, Wang, and Li (2022) in the Journal of Financial Economics, and Zhang and Lee (2021) in the International Journal of Accounting and Auditing Research, we explore the relationship between financial expertise within audit committees and their ability to act as a safeguard against stock price crashes. Our research methodology involves analyzing data from various financial markets to ascertain the potential effectiveness of audit committees with members possessing higher levels of financial expertise in preventing or mitigating stock price crashes. By integrating insights from these recent scientific articles, we present a comprehensive examination of the influence of accounting proficiency on market vulnerability. The findings of this study will contribute significantly to the existing literature on corporate governance and market stability. Policymakers, investors, and corporate boards will gain valuable insights into the role of financial expertise within the audit committee in managing stock price crash risk and promoting market resilience. Ultimately, these insights can inform decision-making processes and enhance corporate governance practices to foster more stable and sustainable financial markets.