Audit committee performance: ownership vs.independence – Did SOX get it wrong?
Article first published online: 30 AUG 2012
© 2012 The Author. Accounting and Finance © 2012 AFAANZ
Accounting & Finance
Volume 54, Issue 1, pages 83–112, March 2014
How to Cite
Bolton, B. (2014), Audit committee performance: ownership vs.independence – Did SOX get it wrong?. Accounting & Finance, 54: 83–112. doi: 10.1111/j.1467-629X.2012.00504.x
- Issue published online: 3 MAR 2014
- Article first published online: 30 AUG 2012
- Received 9 November 2011; accepted 18 July 2012 by Peter Clarkson (Deputy Editor).
- Corporate governance;
- Boards of directors;
- Audit committees
This study documents a positive relationship between audit committee stock ownership and firm performance in large US firms from 1998 to 2008. This study also finds a positive relationship between changes in ownership and performance. These results persist throughout the sample period, do not weaken after Sarbanes–Oxley and are robust to controlling for endogeneity between ownership and performance. After testing shows that there is no relationship between audit committee independence and firm performance, these findings suggest that audit committee stock ownership is an important corporate governance mechanism and potentially a more relevant variable than audit committee independence from a policy perspective.