Audit committee characteristics and financial statement comparability

Financial statement comparability enables weighing the similarities and differences in financial performance between firms. Prior studies mainly focus on the role of accounting standards in the production of comparability, but the role of economic agents has been largely overlooked. We find that a f...

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Bibliographic Details
Published in:Accounting and finance (Parkville) 2020-09, Vol.60 (3), p.2361-2395
Main Authors: Endrawes, Medhat, Feng, Zhuoan, Lu, Meiting, Shan, Yaowen
Format: Article
Language:English
Subjects:
Accounting
Audit committee
Audits
Corporate governance
Financial statement comparability
Financial statements
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Summary:Financial statement comparability enables weighing the similarities and differences in financial performance between firms. Prior studies mainly focus on the role of accounting standards in the production of comparability, but the role of economic agents has been largely overlooked. We find that a firm's audit committee size and financial expertise affect its financial statement comparability. Financial information tends to be more comparable among industry peers when audit committees are larger and more members have financial and accounting expertise. The effect of audit committee expertise on comparability is stronger for firms with less independent and smaller boards, for firms with non‐Big 4 auditors and for firms with CEOs serving as the chairperson of the boards.
ISSN:0810-5391
1467-629X
DOI:10.1111/acfi.12354