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

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

Journal of Contemporary Accounting and Economics, 2015, vol. 11, issue 1, 61-74

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.

Keywords: Corporate governance; Anglo-Saxon audit committee; Statutory auditors; Earnings quality (search for similar items in EconPapers)
JEL-codes: M41 M42 M48 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:11:y:2015:i:1:p:61-74

DOI: 10.1016/j.jcae.2014.12.004

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