Audit committee quality, auditor independence, and internal control weaknesses

Journal of Accounting and Public Policy

Volumn 26, Issue 3, 2007, Pages 300-327

  Zhang, Yan ^a   Zhou, Jian ^a,b   Zhou, Nan ^a  

^a BINGHAMTON UNIVERSITY   (United States)

^b SYRACUSE UNIVERSITY   (United States)

Author keywords

Audit committee financial expertise; Auditor independence; Internal control weakness; Sarbanes Oxley Act

Indexed keywords

EID: 34248349139     PISSN: 02784254     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jaccpubpol.2007.03.001     Document Type: Article

References (52)

1. Abbott L., Parker S., and Peters G. Audit committee characteristics and restatements. Auditing: A Journal of Practice and Theory 23 1 (2004) 69-87
2. Anderson R., Mansi S., and Reeb D. Board characteristics, accounting report integrity, and the cost of debt. Journal of Accounting and Economics 37 3 (2004) 315-342
3. Asbaugh H., LaFond R., and Mayhew B. Do non-audit services compromise independence? Further evidence. The Accounting Review 78 3 (2003) 611-639
4. Ashbaugh-Skaife, H., Collins, D., Kinney, W., forthcoming. The discovery and consequences of internal control deficiencies prior to SOX-mandated audits. Journal of Accounting and Economics.
5. Beasley M. An empirical analysis of the relation between the board of director composition and financial statement fraud. The Accounting Review 71 4 (1996) 443-465
6. Breslow N.E. Covariance adjustment of relative-risk estimates in matched studies. Biotmetrics 38 3 (1982) 661-672
7. Blue Ribbon Committee (BRC), 1999. Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees. Stamford, CT: BRC.
8. Carcello J., and Neal T. Audit committee composition and auditor reporting. The Accounting Review 75 4 (2000) 453-467
9. Chung H., and Kallapur S. Client importance, non-audit services and abnormal accruals. The Accounting Review 78 4 (2003) 931-955
10. Dechow P.M., Sloan R.G., and Sweeney A.P. Causes and consequences of earnings management: an analysis of firms subject to enforcement actions by the SEC. Contemporary Accounting Research 13 1 (1996) 1-36
11. Conger J., Finegold D., and Lawler III E. Appraising boardroom performance. Harvard Business Review 76 (1998) 136-148
12. Dalton D.R., Daily C.M., Johnson J.L., and Ellstrand A.E. Number of directors and financial performance: a meta-analysis. Academy of Management Journal 42 6 (1999) 674-686
13. DeFond M., Hann R., and Hu X. Does the market value financial expertise on audit committees of boards of directors. Journal of Accounting Research 43 2 (2005) 153-193
14. DeFond M., Raghunandan K., and Subramanyam K.R. Do nonaudit service fees impair auditor independence? Evidence from going concern auditor opinions. Journal of Accounting Research 40 4 (2002) 1247-1274
15. DeZoort F., and Salterio S. The effects of corporate governance experience and financial reporting and audit knowledge on audit committee members' judgments. Auditing: A Journal of Practice and Theory 20 2 (2001) 31-47
16. Doyle, J., Ge, W., McVay, S., 2006. Accruals quality and internal control over financial reporting. Working paper, Utah State University, University of Washington, and New York University.
17. Doyle, J., Ge, W., McVay, S., forthcoming. Determinants of weaknesses in internal control over financial reporting. Journal of Accounting and Economics.
18. Eisenberg T., Sundgren S., and Wells M. Larger board size and decreasing firm value in small firms. Journal of Financial Economics 48 1 (1998) 35-54
19. Fama E., and French K. Industry costs of equity. Journal of Financial Economics 43 2 (1997) 153-193
20. Francis, J., Ke, B., 2003. Do fees paid to auditors increase a company's likelihood of meeting analysts' forecasts? Working Paper, University of Missouri and Pennsylvania State University.
21. Frankel R., Johnson M., and Nelson K. The relation between auditor's fees for non-audit services and earnings quality. The Accounting Review 77 Suppl. (2002) 71-105
22. Ge W., and McVay S. The Disclosure of material weaknesses in internal control after the Sarbanes-Oxley Act. Accounting Horizon 19 3 (2005) 137-158
23. Gompers P., Ishii J., and Metrick A. Corporate governance and equity prices. Quarterly Journal of Economics 118 1 (2003) 107-155
24. Guo R., Lev B., and Zhou N. The valuation of biotech IPOs. Journal of Accounting, Auditing and Finance 20 4 (2005) 423-459
25. Hermalin B., and Weisbach M. Endogenously chosen boards of directors and their monitoring of the CEO. American Economic Review 88 1 (1998) 96-118
26. Hermalin, B., Weisbach, M., 2003. Board of directors as an endogenously determined institution: a survey of the economic literature. Economic Policy Review-Federal Reserve Bank of New York, 7-26.
27. Hosmer D., and Lemeshow S. Applied Logistic Regression. second ed. (2000), John Wiley and Sons, New York, NY
28. Hymowitz C., and Lublin J. Corporate reform: the first year: Boardrooms under renovation; scandals prompted changes, but critics say more are needed to prevent another Enron. The Wall Street Journal (Eastern Edition), New York, NY (2003) July 22. B1.
29. Kalbers L., and Fogarty T. Audit committee effectiveness: an empirical investigation of the contribution of power. Auditing: A Journal of Practice & Theory 12 1 (1993) 24-49
30. Klein A. Economic determinants of audit committee independence. The Accounting Review 77 2 (2002) 435-452
31. Klein A. Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics 33 3 (2002) 375-400
32. Krishnamurthy S., Zhou J., and Zhou N. Auditor reputation, auditor independence, and the stock-market impact of Andersen's indictment on its client firms. Contemporary Accounting Research 23 2 (2006) 465-490
33. Krishnan J. Audit committee financial expertise and internal control: an empirical analysis. The Accounting Review 80 2 (2005) 649-675
34. Lennox, C., 2002. Opinion shopping, audit firm dismissals, and audit committees. Working Paper, Hong Kong University of Science and Technology.
35. McMullen D., and Raghunandan K. Enhancing audit committee effectiveness. Journal of Accountancy 182 2 (1996) 79-81
36. Menon K., and Williams J. The use of audit committees for monitoring. Journal of Accounting and Public Policy 13 2 (1994) 121-139
37. Palepu K. Predicting takeover targets: A methodological and empirical analysis. Journal of Accounting and Economics 8 1 (1986) 3-35
38. Pincus K., Rusbarsky M., and Wong J. Voluntary formation of corporate audit committees among NASDAQ firms. Journal of Accounting and Public Policy 8 4 (1989) 239-265
39. Public Company Accounting Oversight Board (PCAOB), 2004. An audit of internal control over financial reporting performed in conjunction with an audit of financial statements. Auditing Standard No. 2. Washington, DC, PCAOB.
40. Purnanandam A., and Swaminathan B. Are IPOs really underpriced? Review of Financial Studies 17 3 (2004) 811-848
41. Reynolds K., Deis D., and Francis J. Professional service fees and auditor objectivity. Auditing: A Journal of Practice & Theory 23 1 (2004) 29-52
42. Raghunandan K., Read W., and Rama D. Audit committee composition, "gray directors," and interaction with internal auditing. Accounting Horizons 15 2 (2001) 105-118
43. Securities Exchange Commission (SEC), June 5, 2003. Management's Report on Internal Control over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports. Release No. 33-8238. Washington, DC, SEC.
44. Securities Exchange Commission (SEC), February 24, 2004. Management's Report on Internal Control over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports. Release No. 33-8392. Washington, DC, SEC.
45. Securities Exchange Commission (SEC), September 22, 2005. Management's Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports of Companies that Are Not Accelerated Filers. Release No. 33-8618. Washington, DC, SEC.
46. Securities Exchange Commission (SEC), December 21, 2005. Revisions to Accelerated Filer Definition and Accelerated Deadlines for Filing Periodic Reports. Release No. 33-8644. Washington, DC, SEC.
47. Securities Exchange Commission (SEC), August 9, 2006a. Internal Control Over Financial Reporting in Exchange Act Periodic Reports of Foreign Private Issuers That Are Accelerated Filers. Release No. 33-8730. Washington, DC, SEC.
48. Securities Exchange Commission (SEC), August 9, 2006b. Internal Control Over Financial Reporting in Exchange Act Periodic Reports of Non-Accelerated Filers and Newly Public Companies. Release No. 33-8731. Washington, DC, SEC.
49. Scarbrough D., Rama D., and Raghunandan K. Audit committee composition and interaction with internal auditing: Canadian evidence. Accounting Horizons 12 1 (1998) 51-62
50. Vafeas N. Board meeting frequency and firm performance. Journal of Financial Economics 53 1 (1999) 113-142
51. Xie B., Davidson W., and DaDalt P. Earnings management and corporate governance: the role of the board and the audit committee. Journal of Corporate Finance 9 3 (2003) 295-316
52. Yermack D. Higher market valuation of companies with a small board of Directors. Journal of Financial Economics 40 2 (1996) 185-212