Board and monitoring committee independence

Cotter, Julie and Silvester, Mark (2003) Board and monitoring committee independence. Abacus, 39 (2). pp. 211-232. ISSN 0001-3072

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Abstract

This study focuses on the composition of boards of directors and their monitoring committees (audit and compensation) for large Australian companies. For firms whose boards use a committee structure, much of the monitoring responsibility of the board is expected to rest with the independent committee members. We document a positive association between the proportion of independent directors on the full board and its monitoring committees, and a greater proportion of independent directors on both audit and compensation committees than the full board. Our hypotheses tests involve an examination of the impact of other mechanisms used to control agency conflicts on full board and committee independence, and the association between this independence and firm value. We find that full board independence is associated with low management ownership and an absence of substantial shareholders. Audit committee independence is associated with reduced monitoring by debtholders when leverage is low. While we predict a positive relationship between board and monitoring committee independence and firm value, our results do not support this conjecture.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Accepted version deposited in accordance with the copyright policy of the publisher. The definitive version is available at www.blackwell-synergy.com.
Faculty/School / Institute/Centre: Historic - Faculty of Business - Department of Accounting (Up to 31 Mar 2007)
Faculty/School / Institute/Centre: Historic - Faculty of Business - Department of Accounting (Up to 31 Mar 2007)
Date Deposited: 11 Oct 2007 01:09
Last Modified: 11 Aug 2021 05:15
Uncontrolled Keywords: agency costs, audit, boards of directors, committees, compensation, corporate governance
Fields of Research (2008): 17 Psychology and Cognitive Sciences > 1702 Cognitive Sciences > 170202 Decision Making
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150303 Corporate Governance and Stakeholder Engagement
15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150102 Auditing and Accountability
Fields of Research (2020): 52 PSYCHOLOGY > 5204 Cognitive and computational psychology > 520402 Decision making
35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3507 Strategy, management and organisational behaviour > 350799 Strategy, management and organisational behaviour not elsewhere classified
35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3501 Accounting, auditing and accountability > 350102 Auditing and accountability
Socio-Economic Objectives (2008): B Economic Development > 91 Economic Framework > 9104 Management and Productivity > 910402 Management
Identification Number or DOI: https://doi.org/10.1111/1467-6281.00127
URI: http://eprints.usq.edu.au/id/eprint/2540

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