Can Anglo-Saxon audit committee scheme improve earnings quality in non-Anglo-Saxon environments?

Jengfang Chen, Rong-Ruey Duh, Audrey Wen-Hsin Hsu, Chen-Min Pan

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

Inspired by the debate about globally uniform governance standards on setting up an Anglo-Saxon model of audit committee, this study investigates whether firms adopting audit committee system vis-à-vis a local governance scheme can improve earnings quality. We exploit a unique setting in Japan where firms are allowed to switch to the audit committee from the statutory auditor board under the conventional two-tier structure. We find that improvements in earnings quality cannot be achieved by merely adopting the audit committee but are reaped by firms that converge to the audit committee with substance. Our results indicate that many Japanese firms may adopt audit committee as a fashionable “label” without embracing shareholder primacy.
Original languageEnglish
Pages (from-to)61-74
Number of pages14
JournalJournal of Contemporary Accounting and Economics
Volume11
Issue number1
DOIs
Publication statusPublished - Apr 2015
Externally publishedYes

Keywords

  • corporate governance
  • Anglo-Saxon audit committee
  • statutory auditors
  • earnings quality

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