Géraldine Broye and Pauline Johannes, professors at EM Strasbourg, received the Best Paper Award at the 19th Conférence Internationale de Gouvernance (CIG), which took place online on November 12–13, 2020.
The paper is entitled “Audit committee and audit committee chair status: Influence on earnings management.”
Abstract
This study examines how the status of audit committee members and audit committee (AC) chairpersons influences earnings management, with a specific focus on the French elite educational affiliation of individuals. Using a sample of 1,585 firm-year observations, we do not provide any evidence that high-status AC members and AC chairs constrain earnings management. However, higher status AC members and AC chairs, compared to the CEO, are associated with less earnings management. Overall, our results do not support the assumption that high-status AC members and AC chairs act as strong managerial monitors. Our findings rather imply that elite AC members and AC chairs influence the expectations and behaviour of lower status CEOs, and constrain opportunistic earnings management through the image of authority they convey.