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Corporate governance and financial authority sanctions

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  • Nadia Smaili
  • Bernard Sinclair-Desgagné

Abstract

The objective of this paper is to examine the joint effect of the board of directors and the auditor on the severity of sanctions imposed by the financial authority. Based on a theoretical model and using a unique dataset, we find that the board of directors and its audit committee play a crucial role when a firm faces financial authority sanctions: the board has a negative effect on the severity financial authority sanctions, while an auditor's effort has no significant impact. In particular, results show that the presence of independent and financial experts on both the board of directors and the audit committee can deter the severity of financial authority sanctions. However, our results suggest that firms that recently hired a Big 4 auditor see no significant impact.

Suggested Citation

  • Nadia Smaili & Bernard Sinclair-Desgagné, 2014. "Corporate governance and financial authority sanctions," International Journal of Managerial and Financial Accounting, Inderscience Enterprises Ltd, vol. 6(1), pages 27-48.
    • Handle: RePEc:ids:injmfa:v:6:y:2014:i:1:p:27-48
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    Cited by:

    1. narjess BOUABDALLAH & jamel Eddine HENCHIRI, 2020. "L' impact des mécanismes de gouvernance interne sur le risque opérationnel bancaire," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 11(1), pages 151-189, June.

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