The Audit Committee as an Interactive Process: Insights on the AC Chairperson’s Power

Tiphaine Compernolle and Chrystelle Richard

European Accounting Review, 2018, vol. 27, issue 4, 623-647

Abstract: The audit committee (AC) chairperson is considered a key actor in the AC process, yet little is known about the role of AC chairpersons and how they exert power in a constraining institutional environment. Considering the AC as an inhabited institution – an institution actively inhabited by agentic and creative actors, this paper provides insights into the dynamics of the AC process with respect to the contribution, power and influence of the AC chairperson. The analysis draws on 53 interviews with experienced AC members, chief financial officers and auditors of 23 publicly listed companies. The results show that AC chairpersons are neither totally constrained by the institutional environment nor fully strategic actors, but carve out individual corridors of action and exert power within the AC process. In particular, our findings bring out three styles of leadership: managing ongoing trust relationships to act as marginal-secant able to play with the various local ecologies of knowledge and power, using in-depth knowledge of the institutional rules to manage them purposefully, serving as an expert in a timely and targeted manner. The analysis points to the ways AC chairpersons inhabit their role, deal with institutional scripts and give meaning to their oversight duties.

Date: 2018
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DOI: 10.1080/09638180.2017.1367315

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