The corporate governance effects of audit committees

Turley, Stuart & Zaman, Mahbub (2004) The corporate governance effects of audit committees. Journal of Management and Governance, 8(3), pp. 305-332.

View at publisher


Arguments associated with the promotion of audit committees in many countries are premised on their potential for alleviating weaknesses in corporate governance. This paper provides a synthesis and evaluation of empirical research on the governance effects associated with audit committees. Given recent policy recommendations in several countries aimed at strengthening these committees, it is important to establish what research evidence demonstrates about their existing governance contribution. A framework for analyzing the impact of audit committees is described, identifying potential perceived effects which may have led to their adoption and documented effects on aspects of the audit function, on financial reporting quality and on corporate performance. It is argued that there is only limited and mixed evidence of effects to support claims and perceptions about the value of audit committees for these elements of governance. It is also shown that most of the existing research has focused on factors associated with audit committee existence, characteristics and measures of activity and there is very little evidence on the processes associated with the operation of audit committees and the manner in which they influence organizational behaviour. It is clear that there is no automatic relationship between the adoption of audit committee structures or characteristics and the achievement of particular governance effects, and caution may be needed over expectations that greater codification around factors such as audit committee members’ independence and expertise as the means of ‘‘correcting’’ past weaknesses in the arrangements for audit committees. The most fundamental question concerning what difference audit committees make in practice continues to be an important area for research development. For future research we suggest:

(i) greater consideration of the organizational and institutional contexts in which audit committees operate;

(ii) explicit theorization of the processes associated with audit committee operation;

(iii) complementing extant research methods with field studie, and;

(iv) investigation of unintended (behavioural) as well as expected consequences of audit committees.

Impact and interest:

51 citations in Scopus
Search Google Scholar™

Citation counts are sourced monthly from Scopus and Web of Science® citation databases.

These databases contain citations from different subsets of available publications and different time periods and thus the citation count from each is usually different. Some works are not in either database and no count is displayed. Scopus includes citations from articles published in 1996 onwards, and Web of Science® generally from 1980 onwards.

Citations counts from the Google Scholar™ indexing service can be viewed at the linked Google Scholar™ search.

ID Code: 76229
Item Type: Journal Article
Refereed: Yes
Keywords: accountability, audit committee effectiveness, audit committee research, corporate governance
DOI: 10.1007/s10997-004-1110-5
ISSN: 1385-3457
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000)
Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BUSINESS AND MANAGEMENT (150300)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Accountancy
Deposited On: 08 Dec 2014 22:42
Last Modified: 10 Dec 2014 02:12

Export: EndNote | Dublin Core | BibTeX

Repository Staff Only: item control page