Impact of Audit Committee Characteristics on Voluntary Disclosures: Evidence from Pakistan

This paper examines the effect of characteristics of audit committee on voluntary disclosure levels. This topic has been given much importance by the researchers, because independent audit plays crucial role in protecting minority shareholder’s interest. The study uses a sample of one hundred fifty companies which are listed on Pakistan Stock Exchange. Studying this sample is tremendously important because of several reasons. Regulatory bodies of Pakistan are pushing companies to implement the code of corporate governance. We have used multiple regression analysis technique to analyze the effect of characteristics of audit committee on voluntary disclosure. The scores of voluntary disclosure has been considered as dependent variable and independence of audit committee, committee member’s financial expertise, committee meetings frequency and committee size were used as independent variables. A checklist of 64 discretionary items was adapted to measure the voluntary disclosure in-lined with the existing literature. We have considered firm’s size, its profitability and leverage as control variables. The results suggest that size and independence of audit committee members have statistically significant effect on voluntary disclosure while, other independent variables do not have any significant effect. The existing literature reports different findings for these variables. Policy makers may further strengthen disclosure framework, which may be helpful in meeting the expectation of investors using the findings of this study.