Audit committees' independence and the information content of earnings announcements in Western Europe
Details
Serval ID
serval:BIB_76EB0C4F578E
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Audit committees' independence and the information content of earnings announcements in Western Europe
Journal
Journal of Accounting Literature
ISSN
0737-4607
Publication state
Published
Issued date
06/2018
Peer-reviewed
Oui
Volume
40
Pages
29-53
Language
english
Abstract
We examine whether the percentage of independent members sitting on the audit committee, in different institutional settings, impacts the market reaction (measured by the abnormal stock returns variance and the abnormal trading volume) to earnings announcements. For our sample composed of more than 7′600 earnings announcements made by European firms from 15 countries between 2006 and 2014, we find that the market reactions to earnings announcements are significantly larger when the audit committee is more independent in countries with weak institutional setting. Our results generally hold after controlling for numerous methodological issues. We conclude that more independent audit committees are substitutes for weak institutions to increase the credibility of earnings announcements. Our results should be of great interest for European regulators who recently introduced new requirements for public firms regarding audit committees’ independence.
Keywords
Audit committee, Europe, Earnings announcements, Market reaction
Web of science
Publisher's website
Create date
28/11/2017 10:33
Last modification date
20/08/2019 14:34