TITLE

Managerial dominance and audit committee independence in Spanish corporate governance

AUTHOR(S)
Ruiz-Barbadillo, Emiliano; Biedma-López, Estíbaliz; Gómez-Aguilar, Nieves
PUB. DATE
December 2007
SOURCE
Journal of Management & Governance;Dec2007, Vol. 11 Issue 4, p311
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The purpose of this paper is to analyse whether the independence of audit committees is affected by the degree of control exerted by managers over the board of directors. Results from a sample of 75 listed Spanish companies show that the majority of firms that voluntarily adopted an audit committee between 1998 and 2001, made an effort to guarantee their independence from management. The degree of independence is shown to be determined by the proportion of inside directors on the board, the same person holding both the CEO and board chairperson positions, and the level of management ownership. These findings may have political implications because existing regulations do not limit the presence of inside directors on audit committees. The presence of inside directors may compromise effectiveness, turning audit committees into instruments of management to provide the appearance of monitoring.
ACCESSION #
27768254

 

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