Do overlapping audit and compensation committee memberships contribute to better financial reporting quality? Empirical evidence for the German two-tier system
Publikation: Beiträge in Zeitschriften › Zeitschriftenaufsätze › Forschung › begutachtet
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in: International Journal of Economics and Accounting, Jahrgang 8, Nr. 3/4, 01.01.2017, S. 196-214.
Publikation: Beiträge in Zeitschriften › Zeitschriftenaufsätze › Forschung › begutachtet
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TY - JOUR
T1 - Do overlapping audit and compensation committee memberships contribute to better financial reporting quality?
T2 - Empirical evidence for the German two-tier system
AU - Velte, Patrick
PY - 2017/1/1
Y1 - 2017/1/1
N2 - Strengthening audit committee effectiveness is a key challenge froma research, regulation and corporate practice perspective. Audit committees’monitoring role in financial reporting is of great importance for shareholdersand other stakeholder groups. This empirical-quantitative study examinesoverlapping membership in the audit and compensation committees and itsimpact on financial reporting quality. The analysis covers a sample of Germanfirms listed on the ‘DAX’, ‘TecDAX’ and ‘MDAX’ for the business years2010–2016 (426 firm-year observations). Correlation and regression analyseswere conducted to evaluate the link between two overlapping variables andfinancial reporting quality. While the first overlapping variable (proportion ofaudit committee members who also sit on the compensation committee)contributes positively to accrual quality (as financial reporting quality), nosignificant results were found for the second overlapping variable (theexistence of an independent financial expert as an overlapping member). Themain result holds for robustness checks and has major implications in theGerman two-tier system.
AB - Strengthening audit committee effectiveness is a key challenge froma research, regulation and corporate practice perspective. Audit committees’monitoring role in financial reporting is of great importance for shareholdersand other stakeholder groups. This empirical-quantitative study examinesoverlapping membership in the audit and compensation committees and itsimpact on financial reporting quality. The analysis covers a sample of Germanfirms listed on the ‘DAX’, ‘TecDAX’ and ‘MDAX’ for the business years2010–2016 (426 firm-year observations). Correlation and regression analyseswere conducted to evaluate the link between two overlapping variables andfinancial reporting quality. While the first overlapping variable (proportion ofaudit committee members who also sit on the compensation committee)contributes positively to accrual quality (as financial reporting quality), nosignificant results were found for the second overlapping variable (theexistence of an independent financial expert as an overlapping member). Themain result holds for robustness checks and has major implications in theGerman two-tier system.
KW - Management studies
UR - https://www.mendeley.com/catalogue/4fe3de66-173a-319e-9c26-d7d975d62849/
U2 - 10.1504/IJEA.2017.092272
DO - 10.1504/IJEA.2017.092272
M3 - Journal articles
VL - 8
SP - 196
EP - 214
JO - International Journal of Economics and Accounting
JF - International Journal of Economics and Accounting
SN - 2041-868X
IS - 3/4
ER -