Do audit committees reduce the agency costs of ownership structure?

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Cai, Charlie X. and Hillier, David and Tian, Gaoliang and Wu, Qinghua (2015) Do audit committees reduce the agency costs of ownership structure? Pacific-Basin Finance Journal, 35 (Part A). pp. 225-240. ISSN 0927-538X (https://doi.org/10.1016/j.pacfin.2015.01.002)

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Abstract

We investigate the agency costs of corporate ownership structure and the role of audit committees in mitigating their effect. Using China as a laboratory, where audit committees are voluntary, we study the demand for and value relevance of audit committees conditional on the various agency costs of corporate ownership. Audit committees complement existing internal governance systems by reducing the agency conflicts embedded in ownership structure. They are always value relevant, the magnitude of which depends upon the level and complexity of the ownership lattice. Audit committees substitute for inefficient external regulatory environments, particularly where weak legal institutions predominate. Our results are robust to firm size, investment level and financial leverage.

ORCID iDs

Cai, Charlie X., Hillier, David ORCID logoORCID: https://orcid.org/0000-0002-1591-4038, Tian, Gaoliang and Wu, Qinghua;
  • Item type:Article
    ID code:51132
    Dates:
    Date
    Event
    1 November 2015
    Published
    15 January 2015
    Published Online
    8 January 2015
    Accepted
    Notes:NOTICE: this is the author’s version of a work that was accepted for publication in Pacific-Basin Finance Journal. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Pacific-Basin Finance Journal, [VOL35, PART A, (Nov 2015)] doi:10.1016/j.pacfin.2015.01.002
    Subjects:Social Sciences > Finance
    Social Sciences > Commerce > Accounting
    Department:University of Strathclyde > University of Strathclyde
    Strathclyde Business School > Accounting and Finance
    Depositing user: Pure Administrator
    Date deposited:16 Jan 2015 13:44
    Last modified:16 Dec 2024 05:27
    Related URLs:
    URI:https://strathprints.strath.ac.uk/id/eprint/51132
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