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Audit Committee Independence and Disclosure: choice for financially distressed firms
Author(s) -
Carcello Joseph V.,
Neal Terry L.
Publication year - 2003
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/1467-8683.00327
Subject(s) - independence (probability theory) , business , accounting , audit committee , audit , auditor independence , joint audit , internal audit , statistics , mathematics
This study examines the relation between audit committee independence and disclosure choice for financially distressed US firms. The tenor of both the financial statement notes and Management Discussion and Analysis (MD&A) is considered. For firms experiencing financial distress, there is a significant positive relation between the percentage of affiliated directors on the audit committee and the optimism of the going‐concern discussion in both the notes and the MD&A. These results add to the growing body of literature documenting a relation between audit committee independence and financial reporting quality.