Board Audit Committee Research Articles

Corporate characteristics, governance attributes and the extent of voluntary disclosure in Bangladesh

The aim of this paper is to examine the linkages “corporate characteristics”, “governance attributes” and the “extent of voluntary disclosure” in Bangladesh. The paper is based on a sample of 120 listed non-financial companies in Dhaka Stock Exchanges (DSE) in 2007. The study used ordinary least squares regression model to examine the relationship between explanatory variables and voluntary disclosure. Using an unweighted relative disclosure index for measuring voluntary disclosure, the empirical results indicate that a positive association between board size and voluntary disclosure, board leadership structure and voluntary disclosure and between board audit committee and voluntary disclosure. In contrast, the extent of voluntary disclosure is negatively related to proportion of INDs, ownership structure and net profitability. Key words: Corporate characteristics, governance attribute, voluntary disclosure.

The Relationship Between Corporate Governance and Value of the Firm in Developing Countries: Evidence from Bangladesh

This study aimed to examine the relationship between four corporate governance mechanisms (board size, board independent director, chief executive officer duality and board audit committee) and value of the firm (performance) measures (return on assets, ROA and return on equity, ROE). The study is based on a sample of 93 listed non-financial companies in Dhaka Stock Exchanges (DSE) 2006. Using OLS as a method of estimation, the results provide evidence of a position significant relationship between ROA and independent director as well as chief executive officer duality. The results further revels a positive significant relationship between ROE and board independent director as well as chief executive officer duality. The study, however, could not provide a significant relationship between the value of the firm measures (ROA and ROE) and board size and board audit committee.

Recent trends in corporate governance practices in the USA

Seven years have passed since the passage of Sarbanes–Oxley or the Public Company Accounting Reform and Investor Protection Act of 2002. Since then, there has been much debate over the costs and benefits of the most far reaching reforms of US business practices since the time of FDR. Glaring abuses in corporate governance continue to capture the headlines as details revealing sky–high executive compensation as well as reports of conflicts of interests and a variety of breaches of fiduciary duties. But have corporate governance standards improved? In this paper, we postulate that corporate governance has four pillars ? board of directors, audit committees, poison pills, and executive and director compensation and ownership. Using the data from 2003 to 2008, we examine recent trends in various aspects of corporate governance that includes board issues, audit committees, poison pills, and executive compensation.

The Sarbanes-Oxley Act Will Change the Governance of Non Profit Organizations

As a public director of a NASDAQ stock exchange listed public corporation, I have seen how quickly the reforms in corporate governance imposed by the Sarbanes-Oxley Act have changed procedures and policies in public corporations. In areas such as transparency of financial records and other financial matters including compensation of top executives and conflict of interest policies affecting both corporate boards of directors and employees of the corporation the reforms of this new federal law have quickly changed corporate practices in many corporations. Many persons who have studied this new law believe that these changes will benefit the public, shareholders, employees, and other stakeholders in the modern corporation by increasing the reputation of these organizations for integrity and transparency. Stock exchanges such as NASDAQ and the New York Stock Exchange now require all listed companies to have (after a transition time) a majority of independent directors on their boards of directors. Only independent directors may serve on the audit, nominating and compensation committees of boards in most cases. Some exceptions are made to these rules for foreign and domestic issues of companies where a majority of the voting power is held by one person. According to Morrison & Foster LLP, Corporate Board Advisory March , 2004, NASDAQ requires that the board of directors of a listed company determine that an independent director does not have a relationship that would “interfere with the exercise of independent judgment” in carrying out the responsibilities of a director.

Empowering Board Audit Committees: Electronic Discovery to Facilitate Corporate Fraud Detection

A number of recent accounting scandals in public companies have illuminated the need for enhanced oversight capabilities by board audit committees. The current reliance of boards on corporate financial statements reviewed by independent auditors is deficient; there is a delay in audit committees receiving these reports. Moreover, these reports transmit historic rather than real-time information to directors. In this paper we investigate if analytical techniques utilized by the U.S. Department of Homeland Security to provide advance warning of potential terrorist threats can be employed to strengthen corporate governance of public companies. The narrative reads that board audit committees can utilize electronic analysis of corporate email as an advanced corporate fraud detection system. Our application of these techniques to one actual case of corporate fraud indicates that an electronic monitoring system would have signaled an alarm of aberrant behavior to the board audit committee 60 days in advance of initial inquiries by regulatory authorities.

CEO Involvement in Selecting Board Members and Audit Committee Effectiveness

CEO Involvement in Selecting Board Members and Audit Committee Effectiveness

CEO Involvement in Selecting Board Members and Audit Committee Effectiveness

CEO Involvement in Selecting Board Members and Audit Committee Effectiveness

Qualifications, diversity and workplace practices: an investigation of higher education internal audit departments

Internal audit is getting recognition thanks to media coverage of alleged fraudulent activities and new regulations that require the evaluation of internal controls. Given this attention, Harrington (2004) identified what organizations should look for when hiring a director of internal audit. This paper reports an investigation of college and university internal audit departments that determines if the directors hold the suggested qualifications and if the qualifications differ based on gender. Differences among the directors of internal auditor include demographic information such as salary, experience and number of staff members as well as who hires the director, and whether the institution has a governing board audit committee. Even with the differences, college and university internal audit directors are very much alike.

Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?

ABSTRACTWe examine three‐day cumulative abnormal returns around the announcement of 702 newly appointed outside directors assigned to audit committees during a period before implementation of the Sarbanes‐Oxley Act (SOX). Motivated by the SOX requirement that public companies disclose whether they have a financial expert on their audit committee, we test whether the market reacts favorably to the appointment of directors with financial expertise to the audit committee. In addition, because it is controversial whether SOX should define financial experts narrowly to include primarily accounting financial experts (as initially proposed) or more broadly to include nonaccounting financial experts (as ultimately passed), we separately examine appointments of each type of expert. We find a positive market reaction to the appointment of accounting financial experts assigned to audit committees but no reaction to nonaccounting financial experts assigned to audit committees, consistent with accounting‐based financial skills, but not broader financial skills, improving the audit committee's ability to ensure high‐quality financial reporting. In addition, we find that this positive reaction is concentrated among firms with relatively strong corporate governance, consistent with accounting financial expertise complementing strong governance, possibly because strong governance helps channel the expertise toward enhancing shareholder value. Together, these findings are consistent with financial expertise on audit committees improving corporate governance but only when both the expert and the appointing firm possess characteristics that facilitate the effective use of the expertise.

Discussion of Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?

Journal of Accounting ResearchVolume 43, Issue 2 p. 195-204 Discussion of Does the Market Value Financial Expertise on Audit Committees of Boards of Directors? ELLEN ENGEL, ELLEN ENGEL University of Chicago.Search for more papers by this author ELLEN ENGEL, ELLEN ENGEL University of Chicago.Search for more papers by this author First published: 24 February 2005 https://doi.org/10.1111/j.1475-679x.2005.00167.xCitations: 26 This discussion has benefited from and reflects comments of the participants at the 2004 Journal of Accounting Research conference. AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume43, Issue2May 2005Pages 195-204 RelatedInformation

Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?

We examine 3-day cumulative abnormal returns (CARs) around the announcement of 850 newly appointed outside board members assigned to audit committees during 1993-2002, a period prior to the implementation of the Sarbanes-Oxley Act (SOX). Motivated by the SOX requirement that public companies disclose whether they have a financial expert on their audit committee, we test whether the market reacts favorably to the appointment of directors with financial expertise to the audit committee. In addition, because it is controversial whether SOX should define financial experts narrowly to include primarily accounting financial experts (as initially proposed), or more broadly to include non-accounting financial experts (as ultimately passed), we separately examine appointments of each type of expert. We find significantly positive CARs around the appointment of accounting financial experts to the audit committee, but not around the appointment of non-accounting financial experts or directors without financial expertise. In addition, CARs are only positive when the newly appointed outside directors are independent (as opposed to affiliated), and when the appointing firms have relatively strong corporate governance prior to appointing the new directors. All of our findings hold in a multivariate test that includes several control variables, and are robust to several sensitivity tests. Our findings are consistent with accounting financial expertise on audit committees improving corporate governance, but only when both the expert and appointing firm possess characteristics that facilitate the effective use of the accounting expertise. Thus, our findings suggest that while appointing financial experts to the audit committee may improve corporate governance, their ability to do so is contextual.

Increasing the role of auditing in corporate governance

While critical accounting research has long been vitally interested in relationships between accounting, auditing and control of business organizations, mainstream research in accounting, finance and management has only recently displayed an increased interest in questions of corporate governance. The notion of corporate governance typically employed in mainstream research focus on enhancing benefits to shareholders. The structure and the functioning of boards of directors, and audit committees of such boards, are primary concerns within this line of research. This paper presents an alternative view of corporate governance and the role of auditing within corporate governance. We argue that the role of auditing should be increased in order to enhance the control of corporations for the benefit of all stakeholders and society generally.

Clinical governance and external audit.

This paper describes a model of clinical governance that was developed at South Auckland Health during the period 1995 to 2000. Clinical quality and safety are core objectives. A multidisciplinary Clinical Board is responsible for the development and publicising of sound clinical policies together with monitoring the effects of their implementation on quality and safety. The Clinical Board has several committees, including an organization-wide Continuous Quality Improvement Committee to enhance the explicit nature of the quality system in terms of structure, staff awareness and involvement, and to develop the internal audit system. The second stream stems from the Chief Medical Officer and clinical directors in a clinical management sense. The Audit Committee of the Board of Directors covers both clinical and financial audit. The reporting lines back to that committee are described and the role of the external auditor of clinical standards is explained. The aim has been to create a supportive culture where quality initiatives and innovation can flourish, and where the emphasis is not on censure but improvement.

Extending corporate accountability: A survey and framework for analysis

This paper has three objectives: to review the state of the art with regard to the literature on corporate internal audit activities; to report on a research study of recent developments in the scope and organization of the internal audit function in major companies in U.S.A.; and to propose an analytical framework which may be used in future research to describe the scope, procedures and responsibilities of the corporate internal audit function. Although there appears to be some confusion in the extant literature regarding the definition and scope of certain internal audit efforts, this research provides new evidence that major U.S. companies are engaging in unprecedented experiments into the use of auditing as a tool for enforcing management and social accountability. This is a movement away from the traditional financial audit which is frequently assumed to fully circumscribe the internal audit function. The implications for implementing heightened standards of corporate accountability should be of interest to audit committees of boards of directors, corporate management, investors, consumers, and future researchers.