Audit committee composition and the use of an industry specialist audit firm

Yi Meng Chen, Robyn Moroney, Keith Houghton

    Research output: Contribution to journalArticle

    Abstract

    Independent, competent boards of directors and audit committees are said to be important mechanisms of corporate governance. The purpose of the present study is to empirically examine the association between audit committee composition and audit quality. Specifically, the link between the proportion of non-executive directors on an audit committee, financial qualifications of directors and the number of audit committee meetings held in a year are investigated and expected to have a positive association with the quality of the audit firm used. Audit quality is proxied by industry specialization. The results support the link between a higher proportion of non-executive directors on an audit committee and use of an industry specialist audit firm. Other measures of audit committee quality (those with a higher proportion of directors with financial qualifications and those that meet more frequently) are not significantly associated with the use of an industry specialist audit firm. Sensitivity analysis shows that the presence of an audit committee is linked to use of an industry specialist audit firm.
    Original languageEnglish
    Pages (from-to)217-239
    JournalAccounting and Finance
    Volume45
    DOIs
    Publication statusPublished - 2005

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