Voluntary Adoption of Audit Committees, Ownership Structure and Firm Performance: Evidence from Taiwan

Junmao Chiu, Huimin Chung and Shih-Chang Hung

Emerging Markets Finance and Trade, 2021, vol. 57, issue 5, 1514-1542

Abstract: Based on exogenous policy in corporate governance reform, this study examines how the voluntary adoption of audit committees affects firm performance and risk. We use a self-selection model to investigate the effect of voluntary adoption of audit committees on Tobin’s Q, return on assets, and idiosyncratic risk. Our results show that Taiwanese listed firms, especially those that are family controlled, have better performance and lower risk when they voluntarily adopt audit committees. Our results suggest that voluntary adoption of audit committees can reduce agency conflict and asymmetric information.

Date: 2021
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DOI: 10.1080/1540496X.2019.1635449

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