Audit committee diligence: do independent directors matter?
ISSN: 1030-9616
Article publication date: 12 May 2023
Issue publication date: 24 May 2023
Abstract
Purpose
This paper aims to examine the relationship between audit committee (AC) independence and AC meeting frequency in an emerging country where the presence of majority independent directors (IDs) on AC is a voluntary requirement.
Design/methodology/approach
This study uses the agency theory framework to examine the relationship between AC independence and AC meeting frequency. The empirical evidence is provided by a unique hand-collected sample of Bangladeshi listed companies. Multivariate regression analysis is used to test the relationship. Robustness checks provide further empirical support.
Findings
This paper finds a positive and significant relationship between AC independence and AC meeting frequency. This is consistent with the notion that IDs are better monitors and demand more frequent AC meetings to protect their reputations. However, having at least two IDs does not significantly affect the number of AC meetings in family firms. This evidence questions director independence in family firms.
Research limitations/implications
This is a single-country study. Therefore, the findings may not apply to other countries with different institutional settings.
Originality/value
Unlike most prior studies, this study is based on a voluntary institutional setting where the companies are not required to have ACs comprising the majority of IDs. In such a setting, the authors find a significantly positive association between AC independence and meeting frequency compared to either a negative or insignificant relationship in the prior literature.
Keywords
Acknowledgements
The authors appreciate many helpful comments from the Editor, the Associate Editor, and two anonymous reviewers.
Swapan Kumar Bala was a Professor at the Department of Accounting and Information Systems, Faculty of Business Studies, University of Dhaka, Bangladesh. He passed away on December 22, 2021. Professor Bala was a recognized scholar, a great mentor, and a friend to many. Author will be missed by all who knew him.
Citation
Biswas, P.K., Bala, S.K. and Mandal, P. (2023), "Audit committee diligence: do independent directors matter?", Accounting Research Journal, Vol. 36 No. 2/3, pp. 274-289. https://doi.org/10.1108/ARJ-09-2021-0278
Publisher
:Emerald Publishing Limited
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