Are all Audit Committee Financial Experts Created Equally?
International Journal of Disclosure and Governance
ISSN or ISBN
There is little extant empirical research that classifies audit committee members based on expertise and independence simultaneously. Additionally, there is little empirical research where different types of gray audit committee members are considered separately. We find disclosure quality (as perceived by financial analysts) is positively related to the percentage of audit committee members who are affiliated with companies providing services to the firm and who are financial experts and negatively related to the percentage of audit committee members who are related to firm executives and who are financial experts. We also find that adding independent audit committee financial experts predates improvements in disclosure quality. As regulators around the world consider implementing audit committee requirements mandated in the United States, our results call into question disqualifying all gray directors from audit committees.
Felo, Andrew J. and Solieri, A. Steve, "Are all Audit Committee Financial Experts Created Equally?" (2009). HCBE Faculty Articles. 581.