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Audit committee expertise in large European firms

César Zarza Herranz (School of Business and Economics, Universidad de Valladolid, Valladolid, Spain)
Felix Lopez-Iturriaga (School of Business and Economics, Universidad de Valladolid, Valladolid, Spain and NRU Higher School of Economics, Moscow, Russian Federation)
Nuria Reguera-Alvarado (University of Seville, Seville, Spain)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 27 November 2020

Issue publication date: 15 December 2020

735

Abstract

Purpose

This paper aims to study how audit committee member expertise is related to certain features of the committee and to the audit process.

Design/methodology/approach

Based on information from 2,477 directors from 296 firms in eight European countries between 2005 and 2014, this study measures average audit committee expertise using a continuous variable, which combines education-based and experience-based expertise. Different measures of the audit process are then regressed against this and other control variables.

Findings

Average committee expertise has increased in recent years. Education-based and experience-based expertise seem to be complementary. Results also show that committees with greater expertise meet more frequently, have fewer directors with full-time dedication and pay lower audit fees. There is no link to changes in the external firm audit, which may be due to mandatory auditor rotation.

Originality/value

The paper provides a comprehensive metric of audit committee expertise that includes directors’ academic background, professional experience and qualifications. In addition, this study expands current knowledge concerning whether and how committee expertise affects the audit process.

Keywords

Acknowledgements

Ministerio de Economía, Industria y Competitividad, Gobierno de España ECO2015-69637-R, ECO2017-84864-P.

Citation

Zarza Herranz, C., Lopez-Iturriaga, F. and Reguera-Alvarado, N. (2020), "Audit committee expertise in large European firms", Managerial Auditing Journal, Vol. 35 No. 9, pp. 1313-1341. https://doi.org/10.1108/MAJ-11-2019-2478

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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