Do audit committees reduce the agency costs of ownership structure?

Pacific Basin Finance Journal

Volumn 35, Issue , 2015, Pages 225-240

  Cai, Charlie X ^a   Hillier, David ^b   Tian, Gaoliang ^c   Wu, Qinghua ^d  

^a UNIVERSITY OF LEEDS   (United Kingdom)

^b UNIVERSITY OF STRATHCLYDE   (United Kingdom)

^c XI'AN JIAOTONG UNIVERSITY   (China)

^d FUDAN UNIVERSITY   (China)

Author keywords

Audit committee; Auditing; Corporate governance; Ownership pyramids; State owned enterprises

Indexed keywords

EID: 84947865731     PISSN: 0927538X     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.pacfin.2015.01.002     Document Type: Article

References (60)

1. Abbott L.J., Parker S., Peters G.F., Raghunandan K. An empirical investigation of audit fees nonaudit fees, and audit committees. Contemp. Account. Res. 2003, 20:215-234.
2. Abbott L.J., Parker S., Peters G.F., Rama D.V. Corporate governance, audit quality, and the Sarbanes-Oxley Act: evidence from internal audit outsourcing. Account. Rev. 2007, 82.
3. Ali A., Chen T.Y., Radhakrishnan S. Corporate disclosures by family firms. J. Account. Econ. 2007, 44:238-286.
4. Archambeault D.S., Dezoort F.T., Hermanson D. Audit committee incentive compensation and accounting restatements. Contemp. Account. Res. 2008, 25:965-998.
5. Bae K.H., Kang J.K., Kim J.M. Tunneling or value added? evidence from mergers by Korean business groups. J. Financ. 2002, 57:2695-2740.
6. Bae K.H., Baek J.S., Kang J.K., Liu W.L. Do controlling shareholders' expropriation incentives imply a link between corporate governance and firm value? Theory and evidence. J. Financ. Econ. 2012, 105:412-435.
7. Ball R., Kothari S.P., Robin A. The effect of international institutional factors on properties of accounting earnings. J. Account. Econ. 2000, 29:1-51.
8. Beasley M.S., Carcello J.V., Hermanson D.R., Neal T.L. The audit committee oversight process. Contemp. Account. Res. 2009, 26:65-104.
9. Boubakri N., Cosset J.-C., Saffar W. The role of state and foreign owners in corporate risk-taking: evidence from privatization. J. Financ. Econ. 2013, 108(3):641-658.
10. Boycko M., Shleifer A., Vishny R.W. A theory of privatisation. Econ. J. 1996, 106:309-319.
11. Bushman R.M., Piotroski J.D., Smith A.J. What determines corporate transparency?. J. Account. Res. 2004, 42:207-252.
12. Bushman R.M., Smith A.J. Financial accounting information and corporate governance. J. Account. Econ. 2001, 32:237-333.
13. Calomiris C.W., Fisman R., Wang Y. Profiting from government stakes in a command economy: evidence from Chinese asset sales. J. Financ. Econ. 2010, 96:399-412.
14. Carcello J.V., Neal T.L. Audit committee characteristics and auditor dismissals following "new" going-concern reports. Account. Rev. 2003, 78:95-117.
15. Caskey J., Nagar V., Petacchi P. Reporting bias with an audit committee. Account. Rev. 2010, 85:447-481.
16. Chang E.C., Wong S.M.L. Governance with multiple objectives: evidence from top executive turnover in China. J. Corp. Financ. 2009, 15:230-244.
17. Chen K.Y., Zhou J. Audit committee, board characteristics, and auditor switch decisions by Andersen's clients. Contemp. Account. Res. 2007, 24:1085-1121.
18. Chen S., Sun Z., Tang S., Wu D. Government intervention and investment efficiency: evidence from China. J. Corp. Financ. 2011, 17(2):259-271.
19. Claessens S., Djankov S., Fan J.R.H., Lang L.H.P. Disentangling the incentive and entrenchment effects of large shareholdings. J. Financ. 2002, 57:2741-2771.
20. Dahya J., Dimitrov O., McConnell J.J. Dominant shareholders, corporate boards, and corporate value: a cross-country analysis. J. Financ. Econ. 2008, 87:73-100.
21. Defond M.L., Hann R.N., Hu X.S. Does the market value financial expertise on audit committees of boards of directors?. J. Account. Res. 2005, 43:153-193.
22. Dewenter K.L., Malatesta P.H. State-owned and privately owned firms: an empirical analysis of profitability leverage, and labor intensity. Am. Econ. Rev. 2001, 91:320-334.
23. Duchin Ran, Sosyura Denis The politics of government investment. J. Financ. Econ. 2012, 106(1):24-48.
24. Engel E., Hayes R.M., Wang X. Audit committee compensation and the demand for monitoring of the financial reporting process. J. Account. Econ. 2010, 49:136-154.
25. Faccio M. Politically connected firms. Am. Econ. Rev. 2006, 96:369-386.
26. Faccio M., Lang L.H.P. The ultimate ownership of Western European corporations. J. Financ. Econ. 2002, 65:365-395.
27. Fan J.P.H., Wong T.J. Corporate ownership structure and the informativeness of accounting earnings in East Asia. J. Account. Econ. 2002, 33:401-425.
28. Fan J.P.H., Wong T.J. Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia. J. Account. Res. 2005, 43:35-72.
29. Fan J.P.H., Wong T.J., Zhang T.Y. The Emergence Of Corporate Pyramides In China 2005, Chinese Univeristy of Hong Kong, Mimeo.
30. Fan J.P.H., Wei K.C.J., Xu X. Corporate finance and governance in emerging markets: a selective review and an agenda for future research. J. Corp. Financ. 2011, 17:207-214.
31. Gaynor L.M., McDaniel L.S., Neal T.L. The effects of joint provision and disclosure of nonaudit services on audit committee members' decisions and investors' preferences. Account. Rev. 2006, 81:873-896.
32. Ghosh A., Marra A., Moon D. Corporate boards audit committees, and earnings management: pre- and post-SOX evidence. J. Bus. Finan. Acc. 2010, 37:1145-1176.
33. Goh B.W. Audit committees boards of directors, and remediation of material weaknesses in internal control. Contemp. Account. Res. 2009, 26:549-571.
34. Grossman S.J., Hart O.D. One share one vote and the market for corporate-control. J. Financ. Econ. 1988, 20:175-202.
35. Huyghebaert N., Wang L. Expropriation of minority investors in Chinese listed firms: the role of internal and external corporate governance mechanisms. Corp. Gov. Int. Rev. 2012, 20:308-332.
36. Harris M., Raviv A. Corporate-control contests and capital structure. J. Financ. Econ. 1988, 20:55-86.
37. Hoitash U., Hoitash R., Bedard J.C. Corporate governance and internal control over financial reporting: a comparison of regulatory regimes. Account. Rev. 2009, 84:839-867.
38. Jensen M.C., Meckling W.H. Theory of firm-managerial behavior agency costs and ownership structure. J. Financ. Econ. 1976, 3:305-360.
39. Jian M., Wong T.J. Propping through related party transactions. Rev. Acc. Stud. 2010, 15:70-105.
40. Johnson S., Mitton T. Cronyism and capital controls: evidence from Malaysia. J. Financ. Econ. 2003, 67:351-382.
41. Karamanou I., Vafeas N. The association between corporate boards, audit committees, and management earnings forecasts: an empirical analysis?. J. Account. Res. 2005, 43:453-486.
42. Klein A. Audit committee board of director characteristics, and earnings management. J. Account. Econ. 2002, 33:375-400.
43. Krishnan G.V., Visvanathan G. Does the SOX Definition of an accounting expert matter? The association between audit committee directors, accounting expertise and accounting conservatism. Contemp. Account. Res. 2008, 25:827-858.
44. Krishnan J. Audit committee quality and internal control: an empirical analysis. Account. Rev. 2005, 80:649-675.
45. La Porta R., Lopez-de-Silanes F., Shleifer A. Corporate ownership around the world. J. Financ. 1999, 54:471-517.
46. Lemmon M.L., Lins K.V. Ownership structure corporate governance, and firm value: evidence from the East Asian financial crisis. J. Financ. 2003, 58:1445-1468.
47. Lennox C.S., Park C.W. Audit firm appointments audit firm alumni, and audit committee independence. Contemp. Account. Res. 2007, 24:235-257.
48. Leuz C., Oberholzer-Gee F. Political relationships global financing, and corporate transparency: evidence from Indonesia. J. Financ. Econ. 2006, 81:411-439.
49. Liu G., Tian G. Controlling shareholder expropriations and firm's leverage decision: evidence from Chinese non-tradable share reform. J. Corp. Financ. 2012, 18:782-803.
50. Magilke M.J., Mayhew B.W., Pike J.E. Are independent audit committee members objective? Experimental evidence. Account. Rev. 2009, 84:1959-1981.
51. Naiker V., Sharma D.S. Former audit partners on the audit committee and internal control deficiencies. Account. Rev. 2009, 84:559-587.
52. Price R., Román F.J., Rountree B. The impact of governance reform on performance and transparency. J. Financ. Econ. 2011, 99(1):76-96.
53. Scharfstein D.S., Stein J.C. The dark side of internal capital markets: divisional rent-seeking and inefficient investment. J. Financ. 2000, 55:2537-2564.
54. Shleifer A. State versus private ownership. J. Econ. Perspect. 1998, 12:133-150.
55. Shleifer A., Vishny R.W. Politicians and firms. Q. J. Econ. 1994, 109:995-1025.
56. Vafeas N. Audit committees boards, and the quality of reported earnings. Contemp. Account. Res. 2005, 22:1093-1122.
57. Wang Q., Wong T.J., Xia L.J. State ownership the institutional environment, and auditor choice: evidence from China. J. Account. Econ. 2008, 46:112-134.
58. Wei Z., Xie F., Zhang S. Ownership structure and firm value in China's privatized firms: 1991-2001. J. Financ. Quant. Anal. 2005, 40:87-108.
59. Wooldridge J.M. Introductory Econometrics : A Modern Approach (Mason) 2002.
60. Xie B., Davidson W.N., DaDalt P.J. Earnings management and corporate governance: the role of the board and the audit committee. J. Corp. Financ. 2003, 9:295-316.