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The impact of audit committee quality on financial reporting quality and audit fees

Elizabeth A. Rainsbury, Michael Bradbury and Steven F. Cahan

Journal of Contemporary Accounting and Economics, 2009, vol. 5, issue 1, 20-33

Abstract: This study examines the association between the quality of audit committees on financial reporting quality and external audit fees in an environment where the formation of audit committees was unregulated. The study uses a sample of 87 New Zealand firms in 2001 when no regulations or listing rules existed for audit committees. The results show no significant association between the quality of an audit committee and the quality of financial reporting. These results are robust to alternative measures of earnings quality. Similarly, the quality of audit committees has little impact on the level of fees paid to external auditors. The results suggest that the benefits of ‘best practice’ audit committees may be less than anticipated by regulators and policymakers.

Keywords: Audit committees; Auditing; Financial reporting quality; Audit fees (search for similar items in EconPapers)
Date: 2009
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Journal of Contemporary Accounting and Economics is currently edited by Agnes C.S. Cheng, P. Clarkson, F.A. Gul, Zoltan Matolcsy, Dan Simunic and Ben Srinidhi

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