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Can Anglo-Saxon audit committee scheme improve earnings quality in non-Anglo-Saxon environments?

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  • Chen, Jengfang
  • Duh, Rong-Ruey
  • Hsu, Audrey Wen-Hsin
  • Pan, Chien-Min

Abstract

Inspired by the debate about globally uniform governance standards on setting up an Anglo-Saxon model of audit committee, this study investigates whether firms adopting audit committee system vis-à-vis a local governance scheme can improve earnings quality. We exploit a unique setting in Japan where firms are allowed to switch to the audit committee from the statutory auditor board under the conventional two-tier structure. We find that improvements in earnings quality cannot be achieved by merely adopting the audit committee but are reaped by firms that converge to the audit committee with substance. Our results indicate that many Japanese firms may adopt audit committee as a fashionable “label” without embracing shareholder primacy.

Suggested Citation

  • Chen, Jengfang & Duh, Rong-Ruey & Hsu, Audrey Wen-Hsin & Pan, Chien-Min, 2015. "Can Anglo-Saxon audit committee scheme improve earnings quality in non-Anglo-Saxon environments?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 11(1), pages 61-74.
    • Handle: RePEc:eee:jocaae:v:11:y:2015:i:1:p:61-74
    DOI: 10.1016/j.jcae.2014.12.004
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Corporate governance; Anglo-Saxon audit committee; Statutory auditors; Earnings quality;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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