International Research Journal of Finance and Economics
Director Tenure, Independent Audit Committee, Earnings Management
This study examines whether board tenure of directors on the independent audit committee affects the effectiveness of the committee in oversight of financial reporting.Using a larger size sample of 7,700 firm-year observations over the period 1998 to 2005 in U.S., we document strong evidence that the proportion of long tenure directors on the independent audit committee is negatively associated with earnings management. The results are robust to several sensitivity analyses. Our findings further corroborate the notion that long tenure directors have greater expertise and experience to effectively monitor financial reporting process.
Liu, Guoping and Sun, Jerry. (2010). Director tenure and independent audit committee effectiveness. International Research Journal of Finance and Economics, 51.