The Impact of Audit Committee and Its Characteristics on the Firms’ Information Environment

Abstract

The present study aims at investigating the impact of the presence of audit committee and its characteristics on the corporate information environment. These characteristics include independence, financial expertise, size, and the gender of the audit committee. Although several methods have been discussed for measuring information environment in the accounting and finance literature, this research is pioneer in developing a comprehensive index using mathematical method to measure information environment. Given this fact, the impact of the presence of audit committee on information environment during 2008-2015, which was the period before and after the approval of the internal control guidelines, was investigated. The results of analyzing the data collected from 41 firms using panel data technique point to a positive relationship between the presence of audit committee and information environment. In addition, the impact of the audit committee characteristics on information environment during 2012-2015 and after the approval of guidelines was examined. The results of analyzing 121 firms using panel data technique indicate that independence and financial expertise are positively associated with information environment. However, no significant relationship was found between other characteristics and information environment.