Voluntary Audit Committee Disclosures and Credibility of Financial Reporting

Loading...
Thumbnail Image

Persistent link to this item

Statistics
View Statistics

Journal Title

Journal ISSN

Volume Title

Title

Voluntary Audit Committee Disclosures and Credibility of Financial Reporting

Alternative title

Published Date

2019-10

Publisher

Type

Thesis or Dissertation

Abstract

This paper examines whether the voluntary disclosure of audit committee activities in proxy statements increases market participants’ perception about the firm’s reporting credibility. In recent years, various stakeholders have expressed concern about the lack of transparency in how audit committees execute their responsibilities. To enhance investor confidence in financial reporting, companies have started to voluntarily provide additional task-oriented information about the audit committee oversight process beyond the limited regulatory requirement. Using textual content analysis techniques, I test whether these narrative disclosures improve market participants’ perception of the quality of reported earnings, captured by the earnings response coefficient (ERC) and analysts’ forecast dispersion (DISP). I find that, relative to a matched control sample of non-disclosing firms, the ERC of disclosing firms is significantly higher and their analysts’ forecast dispersion is significantly lower after the voluntary disclosure of audit committee activities and these effects increase with the number of dimensions of audit committee tasks disclosed. Further, cross-sectional analysis shows that the effects on ERC and DISP after the disclosure are incrementally greater for firms with a weak information environment. In light of the SEC’s renewed interest in improving transparency of the audit committee process, I provide timely evidence of the usefulness of narrative audit committee disclosures in enhancing the credibility of financial reporting.

Keywords

Description

University of Minnesota Ph.D. dissertation. October 2019. Major: Business Administration. Advisors: Pervin Shroff, Ivy Zhang. 1 computer file (PDF); (vi, 76 pages).

Related to

Replaces

License

Collections

Series/Report Number

Funding information

Isbn identifier

Doi identifier

Previously Published Citation

Other identifiers

Suggested citation

Guo, Xiaoli. (2019). Voluntary Audit Committee Disclosures and Credibility of Financial Reporting. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/209213.

Content distributed via the University Digital Conservancy may be subject to additional license and use restrictions applied by the depositor. By using these files, users agree to the Terms of Use. Materials in the UDC may contain content that is disturbing and/or harmful. For more information, please see our statement on harmful content in digital repositories.