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
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Audit committee adoption and firm value: evidence from UK financial institutions
TL;DR: In this article, the impact of the adoption of an audit committee (AC) adoption on the financial value of financial institutions in the UK and also the effect of the establishment of an AC on firm value during the pre/post-global financial crisis era was examined.
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Female audit committee directorship and audit fees
Yosra Mnif Sellami,Imen Cherif +1 more
TL;DR: In this article, the authors examined the association between female audit committee representation and audit fees, taking into account their demographic attributes, and found that increased audit fees are driven by the level of female directors' professional experience rather than their mere representation.
Journal ArticleDOI
Audit Committee Oversight of Fraud Risk: The Role of Social Ties, Professional Ties, and Governance Characteristics
TL;DR: In this article, the authors examine audit committee (AC) oversight of fraudulent financial reporting (FFR) risk and management integrity, and how such oversight varies with AC social ties, professional ties, and governance characteristics.
Journal ArticleDOI
Network connections, CEO compensation and involuntary turnover: The impact of a friend of a friend
TL;DR: In this article, indirect connections between a CEO and independent board members are associated with higher CEO compensation, suggesting that outrage is not as big a concern as compensation is the foci of stakeholders.
Journal ArticleDOI
The dark side of board network centrality: Evidence from merger performance
TL;DR: Li et al. as mentioned in this paper show that board network centrality is associated with lower acquirer stock returns in Chinese capital market, and that board directors with more centrality utilize their connections for private benefits at the expense of shareholder wealth.
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.