Characteristics of audit committee financial experts: an empirical study

Abstract

Purpose

The purpose of this paper is to examine the characteristics and qualifications of audit committee financial experts. Specifically, the paper examines if the majority of the financial experts possess accounting or general management experience.

Design/methodology/approach

The authors collected the data through survey and use cross tabulation (univariate) and logistic regression to analyze the data.

Findings

The results show that accounting certification and audit committee experience are valued positively by the Board of Directors when designating an audit committee member as a financial expert. Prior experience as a CEO results in a lower probability of being designated as a financial expert.

Research limitations/implications

Non‐response bias may be a factor which should be considered. There are other factors such as stock exchange affiliation of the company that have not been included due to the anonymous nature of the survey.

Practical implications

It provides useful information and benchmark to the Board of Directors with respect to the characteristics of designated audit committee financial experts.

Originality/value

This is the first paper to examine the characteristics of audit committee financial experts through survey. The paper presents a richer array of factors compared to what is available in proxy statements. Audit committees, financial statement users, policy makers, and researchers will find the results interesting and useful.

Citation

Iyer, V.M., Bamber, E.M. and Griffin, J. (2013), "Characteristics of audit committee financial experts: an empirical study", Managerial Auditing Journal, Vol. 28 No. 1, pp. 65-78. https://doi.org/10.1108/02686901311282506