Boards of Directors, Audit Committees, and the Information Content of Earnings
Weinberg Center for Corporate Governance Working Paper No. 2003-04
41 Pages Posted: 23 Oct 2003
Date Written: September 2003
Abstract
We examine the relation between the information content of earnings (earnings response coefficients) and board and audit committee structure for a broad sample of more than 1,200 firms during 2001. We find that earnings are more informative the greater is the independence and the activity of the full board. Moreover, firms that have separated the CEO and board Chair positions appear to have more informative earnings. We also find that audit committee characteristics influence the information content of earnings. In particular, firms that have smaller audit committees have more informative earnings. However, we find that audit committee independence incremental to the independence of the full board is unrelated to the information content of earnings.
Keywords: Boards of Directors, Audit Committees, Governance, Earnings Response Coefficient
JEL Classification: G12, G34, M41, M49
Suggested Citation: Suggested Citation
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