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Voluntary Audit Committee Formation and Practices among Belgian Listed Companies
Author(s) -
Willekens Marleen,
Bauwhede Heidi Vander,
Gaeremynck Ann
Publication year - 2004
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/j.1099-1123.2004.00091.x
Subject(s) - audit committee , chief audit executive , accounting , audit evidence , joint audit , business , audit , internal audit , audit plan , stock exchange , external auditor , information technology audit , charter , finance , political science , law
In this paper we investigate some factors that are associated with voluntary audit committee formation in a non‐Anglo‐Saxon environment (and where audit committee formation is voluntary, even for listed companies). For those companies that voluntarily instaled an audit committee we also present evidence on their working practices. We use data from Belgian listed companies for that purpose. Consistent with previous Anglo‐Saxon research, we find that voluntary audit committee formation is positively correlated with the proportion of independent directors on the board of directors and external audit‐firm size. Contrary to prior studies, we do not find that agency costs and board size are associated with voluntary audit committee formation. As to working practices, we find that a substantial amount of Belgian‐listed companies do not comply with the recommendations of the Brussels Stock Exchange regarding audit committees, as about 50% of these companies has no audit committee. Those companies that do have an audit committee perform quite well according to the Belgian recommendations, but not according to recently formulated (tougher) US requirements, as they typically do not include a financial expert nor disclose the audit committee charter.