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Determinants of Audit Committee Independence in the Financial Sector of Bangladesh

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  • Bishnu Kumar Adhikary
  • Ranjan Kumar Mitra

Abstract

This paper examines the determining factors of the audit committee independence in the financial sector of Bangladesh by employing a cross-sectional regression analysis on 72 financial firms. The paper reveals that firms with large boards and more non-executive directors tend to provide more independence to the auditors. Also, large firms with potential growth opportunities show less interest in giving freedom to the audit committee members; whereas firms with the higher leverage demand more audit committee independence to confirm quality monitoring and quality financial statements. The study, however, reveals a negative relationship between the size of the audit committee and its work independence. The study also does not find any significant association between audit committee independence and presence of experts in the audit committee, percentage of insider ownership, free cash flow, and firms¡¯ profitability.

Suggested Citation

  • Bishnu Kumar Adhikary & Ranjan Kumar Mitra, 2016. "Determinants of Audit Committee Independence in the Financial Sector of Bangladesh," Applied Finance and Accounting, Redfame publishing, vol. 2(2), pages 46-56, August.
    • Handle: RePEc:rfa:afajnl:v:2:y:2016:i:2:p:46-56
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    References listed on IDEAS

    as
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    4. Carlos Fernández Méndez & Rubén Arrondo García, 2007. "The Effects of Ownership Structure and Board Composition on the Audit Committee Meeting Frequency: Spanish evidence," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(5), pages 909-922, September.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    audit committee; audit committee independence; financial sector; Bangladesh;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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