Overlap and busy members sitting on the audit committee

Poretti, Cédric (Ecole hôtelière de Lausanne, HES-SO // University of Applied Sciences Western Switzerland) ; Schatt, Alain (HEC Lausanne)

This paper investigates the impact of the presence of “over-boarded” directors on the audit committee on earnings management in Europe. Our study is based on a sample of 1420 firms from 15 European countries for the period 2006-2014. For the full sample, we find that the presence of “overlap” directors decreases earnings management, but the presence of “over-boarded” directors (i.e. “busy” directors and “overlap” directors at the same time) increases earnings management. However, “overlap” directors have favorable consequences on earnings management for small firms only, while earnings management is reduced in large firms when “busy” directors are sitting on the audit committee. Finally, “busy” directors and “overlap” directors reduce earnings management in weak institutional contexts, especially for small firms. In contrary, there is no significant effect for large firms in strong institutional context. Our results confirm that the composition of the audit committee has different economic consequences in different institutional and economic contexts and should, therefore, be interesting for European regulators who propose various requirements for listed companies to improve the efficiency of corporate governance.

Type de conférence:
full paper
Economie et Services
EHL Ecole hôtelière de Lausanne
Adresse bibliogr.:
Lausanne, Suisse, 15-16 mai 2017
Lausanne, Suisse
15-16 mai 2017
30 p.
Publié dans
Actes de la 16ème Conférence Internationale de Gouvernance
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