"Who steals my purse steals trash...": reputation as a factor in establishing the value of non-executive directors and members of audit committees

Michael Page, Laura F. Spira

International Journal of Management and Decision Making, 2000, vol. 1, issue 1, 14-27

Abstract: Independent audit is a key corporate governance mechanism and the involvement of non-executive directors in audit committees has been promoted as a method of improving the accountability of company management to investors. Grout et al. [1] suggested that qualified independence of auditors is a signalling device; auditors will be vulnerable to loss if their acquiescence in marginally acceptable accounting practices is not backed by well-founded belief in the stability of their client. This paper extends this model to non-executive directors (NEDs) and members of audit and remuneration committees of large UK corporations, suggesting that the threat of the loss of reputation plays a similar role in the efficacy of NEDs as a signalling device. This hypothesis is tested by using titles and honours bestowed by the UK Government as a proxy for reputation. NEDs are found to be six times as likely to hold honours as executive directors.

Keywords: audit committees; corporate governance; honours; non-executive directors; reputation. (search for similar items in EconPapers)
Date: 2000
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=1212 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijmdma:v:1:y:2000:i:1:p:14-27

Access Statistics for this article

More articles in International Journal of Management and Decision Making from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().