Board and monitoring committee independence

Article

Cotter, Julie and Silvester, Mark. 2003. "Board and monitoring committee independence." Abacus: a journal of accounting, finance and business studies. 39 (2), pp. 211-232. https://doi.org/10.1111/1467-6281.00127
Article Title

Board and monitoring committee independence

ERA Journal ID19052
Article CategoryArticle
AuthorsCotter, Julie (Author) and Silvester, Mark (Author)
Journal TitleAbacus: a journal of accounting, finance and business studies
Journal Citation39 (2), pp. 211-232
Number of Pages22
Year2003
Place of PublicationAustralia
ISSN0001-3072
1467-6281
Digital Object Identifier (DOI)https://doi.org/10.1111/1467-6281.00127
Web Address (URL)https://onlinelibrary.wiley.com/doi/10.1111/1467-6281.00127
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.

Keywordsagency costs, audit, boards of directors, committees, compensation, corporate governance
ANZSRC Field of Research 2020520402. Decision making
350799. Strategy, management and organisational behaviour not elsewhere classified
350102. Auditing and accountability
Public Notes

File reproduced in accordance with the copyright policy of the publisher/author.

Byline AffiliationsFaculty of Business
School of Accounting, Economics and Finance
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