Journal ArticleDOI
The Audit Committee: Management Watchdog or Personal Friend of the CEO?
TLDR
This article found that firms whose audit committees have "friendship" ties to the CEO purchase fewer audit services and engage more in earnings management, and that auditors are also less likely to issue going-concern opinions or to report internal control weaknesses when friendship ties are present.Abstract:
To ensure that audit committees provide sufficient oversight over the auditing process and quality of financial reporting, legislators have imposed stricter requirements on the independence of audit committee members. Although many audit committees appear to be “fully” independent, anecdotal evidence suggests that CEOs often appoint directors from their social networks. Based on a 2004 to 2008 sample of U.S.-listed companies after the Sarbanes-Oxley Act we find that these social ties have a negative effect on variables that proxy for oversight quality. In particular, we find that firms whose audit committees have “friendship” ties to the CEO purchase fewer audit services and engage more in earnings management. Auditors are also less likely to issue going-concern opinions or to report internal control weaknesses when friendship ties are present. On the other hand, social ties formed through “advice networks” do not seem to hamper the quality of audit committee oversight.read more
Citations
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Journal ArticleDOI
Do financial performance and firm’s value affect the quality of corporate social responsibility disclosure: Moderating role of chief executive officer’s power in China
TL;DR: Wang et al. as mentioned in this paper investigated the correlation between the quality of corporate social responsibility disclosure (CSRD) and financial performance (FP), and they also investigated the moderating role of chief executive officer power (CEOP) in the relationship between CSR disclosure and firm value in Chinese listed companies.
Journal ArticleDOI
Liens sociaux entre dirigeants et administrateurs et prise de risque de la firme
TL;DR: In this paper, the consequences of liens sociaux on the prise de risque of a firme are investigated. And the results show that these liens entrainent une baisse du risque which is d'autant plus significative than the duree en poste du dirigeant.
If the audit committee speaks, does the board listen?
TL;DR: In this article, the authors investigate whether the benefit of a distinct audit committee depends on the acceptance of the audit committee's message by the rest of the board, and find consistent evidence that the benefit is diminished when the board forms a cohesive group, as this instigates frictions between both board subgroups.
Journal ArticleDOI
On the effort-saving effect of audit committee–auditor interlocking
TL;DR: Wang et al. as mentioned in this paper investigated the effort-saving effect of auditing committee interlocking and found that AClk is negatively associated with audit effort without any deterioration in audit quality.
References
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Book
Econometric Analysis of Cross Section and Panel Data
TL;DR: This is the essential companion to Jeffrey Wooldridge's widely-used graduate text Econometric Analysis of Cross Section and Panel Data (MIT Press, 2001).
Journal ArticleDOI
Birds of a Feather: Homophily in Social Networks
TL;DR: The homophily principle as mentioned in this paper states that similarity breeds connection, and that people's personal networks are homogeneous with regard to many sociodemographic, behavioral, and intrapersonal characteristics.
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The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors
TL;DR: In this article, the authors proposed a new measure of one aspect of the quality of accruals and earnings, which is the residual from firm-specific regressions of changes in working capital on past, present, and future operating cash flow realizations.
Posted Content
Regression standard errors in clustered samples
TL;DR: In this paper, the residuals are sorted and the observation is located in the residual corresponding to the quantile in question, taking into account weights if they are applied, and the square root of the sum of the weights is calculated.
Journal ArticleDOI
Methodological issues related to the estimation of financial distress prediction models
TL;DR: In this paper, the authors examined conceptually and empirically two estimation biases which can result when financial distress models are estimated on non-random samples and showed that these biases can result in biased parameter and probability estimates if appropriate estimation techniques are not used.