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| Author: | Chen, J. Duh, R-R Shiue, F.N |
| Title: | The effect of audit committees on earnings-return association: evidence from foreign registrants in the United States |
| Journal: | Corporate governance
2008 : JAN, VOL. 16:1, p. 32-40 |
| Index terms: | audit committees USA shareholder value regression analysis |
| Freeterms: | earnings response coefficients ERC anglo-american |
| Language: | eng |
| Abstract: | The aim of this paper is to compare earnings response coefficients (ERC) of foreign registrants by comparing two options: (1) foreign registrants without ACs and their US-matched firms and (2) foreign registrants with ACs and their US matched firms. If the new AC rules (1999) that were designed to increase the responsibilities of audit committees, improved the effectiveness of ACs, it could be expected that firms with ACs would experience an increase in the quality of financial statements which may lead to higher ERCs. The results are uniform with the idea that the establishment of audit committees may be related to higher earnings return associations. The new audit committee rules support the result. This reveals that the effectiveness of the audit committee in resolving agency problems is applicable to foreign companies, even though their home countries adopt non-Anglo-American corporate governance systems. |
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