Abstract Using a sample of Chinese A‐Share listed companies during 2018–2023, we explore the influence of visual annual reports (VARs) on stock price crash risk. The results suggest that VARs are negatively associated with crash risk, and several robustness and endogeneity examinations validate our primary findings. Mechanism analyses reveal that reduced information asymmetry and increased internal control quality may serve as potential pathways through which VARs influence crash risk. Additionally, cross‐sectional examinations suggest that the negative relation between VARs and crash risk is more pronounced for companies with poor annual report readability and limited external monitoring.
This paper empirically examines the relationship between the geographical distance of audit committee chairs(ACCs) and corporate earnings quality by taking A-share listed companies in Shanghai and Shenzhen from 2007 to 2018 as samples. It is found that the geographical distance between ACC’s work place and the operation place of listed companies can significantly reduce earnings quality, and the farther the geographical distance, the worse the earnings quality. In addition, the external audit conducted by the Big4 auditors can significantly suppress the impact of geographical distance on earnings quality. Further analysis found that there is a partial mediation effect in the quality of internal control. The research conclusions of this paper provide a new idea for for companies to appoint ACCs. The research on accounting and financial issues from the perspective of economic geography is refined to the field of audit committee, which enriches the research literature on factors influencing the functions of ACCs. It is of great significance to improve the performance of the committee, the long-term development of the company and the protection of investors’ interests.
Using a sample of A-share listed companies in China for the period of 2007-2018, this paper empirically tests the impact of the geographical distance of the audit committee chair (ACC) on the company’s cost of equity capital. The study found that there is a significant positive correlation between the geographical distance of ACC and the company’s cost of equity capital, and the regulatory strength will weaken the positive relationship between the two. This conclusion still holds after a series of robustness tests. The research conclusion of this paper not only enriches the research on the characteristics of audit committee chairs, expands the research extension of geographical economics in the field of financial accounting, but also provides certain theoretical support and test evidence for listed companies to select ACC and reduce the cost of equity capital. It is of great significance to improve the performance level of the audit committee and protect the interests of investors.
ABSTRACTThis paper examines the effect of audit committee-auditor interlocking on the audit fees in a sample of listed Chinese companies from 2005 to 2018. It is found that audit committee-auditor interlocking significantly increases the audit fees, and this positive relationship is more significant in better external governance environments, as measured by the marketization level, legal environment, regulatory intensity, and analyst attention. Further analyses show that the interlocking has a greater positive impact on audit fees when it is caused by the audit committee chair, audit partner, and industry specialist auditor, and when the interlocking companies are operating in the same industry. The interlocking relationship also increases audit quality and reduces the stock price crash risk in which the audit fees play the mediating role. The results suggest that it’s the reputation mechanism that motivates audit committee directors and auditors in interlocking relationships to increase audit fees and audit quality. We provide practical implications for auditors, listed companies, investors, and regulators in aspects of increasing audit fees and audit quality, protecting investors’ interests, and improving the external governance environments.KEYWORDS: Audit committee-auditor interlockingaudit feesexternal governance environmentaudit qualityJEL CLASSIFICATION: M42G30M40 Disclosure statementNo potential conflict of interest was reported by the author(s).Data availability statementThe data that support the findings of this study are available from the corresponding author upon reasonable request.Ethics approval statementEthics approval is not required for this research.Notes1 Referring to Bae et al. (Citation2021), the variable Interlock is actually the interaction term between Intlk_Com and Interlock. If Interlock is equal to 1, so is Intlk_Com. Therefore, we only show the interaction term and Intlk_Com in Model (3). Another approach would be to include only the interaction term but use the company fixed effect in the model. For robustness consideration, we also use this approach and the interaction term is also positive and statistically significant at the 5% level, which complies with the hypothesis.Additional informationFundingThis work was supported by the National Social Science Fund of China under Grant (18BGL091) and Graduate Education Innovation and Reform Project of Sichuan University (GSGJHKC2021).
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