bronson - are fully independent audit committees really necessary

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Chyok

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ARE FULLY INDEPENDENT AUDIT COMMITTEES REALLY NECESSARY? Scott N. Bronson Doctoral Candidate University of Tennessee Joseph V. Carcello Stokely Distinguished Scholar and Professor Carl W. Hollingsworth Doctoral Candidate University of Tennessee Terry L. Neal Associate Professor KEY WORDS: Audit Committee Independence, Auditor Dismissals, Going-concern Reports ACKNOWLEDGEMENTS: We thank Dana Hermanson and Zoe-Vonna Palmrose for their helpful comments on earlier versions of this paper. ARE FULLY INDEPENDENT AUDIT COMMITTEES REALLY NECESSARY? ABSTRACT: Accounting scandals and concerns about the quality of financial statements have led to many calls for improved audit committee effectiveness. Prior research indicates that audit committee independence is positively related to effective oversight of the financial reporting process. Unfortunately, prior research has not provided an answer as to how much independence on the audit committee is enough. This is an important unanswered question because Section 301 of SOX requires all listed companies to maintain an audit committee that is 100 percent independent. In this paper we examine whether the monitoring benefits provided by an independent audit committee can be attained at levels of independence that are lower than the 100 percent required by SOX. Our results suggest that the benefits of audit committee independence are not ...

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Publié par

Chyok

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English

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