TheResearch On The Relationship Of Audit Committee Characteristics And Quality Of Accounting Information Disclosure

China’s capital market was established in1990.During the period of more than20years’ development, investors, creditors, regulators and other stakeholders paidmore and more attention to the information disclosure of listed companies.Information disclosure of listed companies (especially accounting information) is themain way for them to understand the company’s operating conditions and financialresults, and is an important basis for their decision making. False information, fraudand other problems occurring in listed companies revealpoor quality of accountinginformation disclosure, which directly affects the efficiency of capital market. Sincethe end of last century, our country aimed to establish a modern corporate governancestructure, and adopted and implemented a number of reform measures. The auditcommittee, which was introduced in2002to China, is considered to be an importantself-regulatory governance mechanism with significant oversight responsibilities overfinancial reporting, audit activities and internal control. This paper aims to test whichcharacteristics of audit committee play the key role in improving the quality ofaccounting information disclosure through the empirical analysis of China’s listedcompanies; meanwhile take Audit Committee members’ identity (independentdirectors, non-independent directors form management, non-independent directors notform management), management involvement in selecting board members (thenominated committee has active management members) into account.This paper consists of five parts. Firstly, the audit committee’s researchbackground and meaning, framework and innovation are described; secondly, thereview of related research at home and abroad on the audit committee and quality ofaccounting information disclosure; thirdly, the theoretical analysis on the auditcommittee characteristics and accounting information disclosure; fourthly, theempirical analysis, this paper establishes regression models with2008to2012related annual report and other database selected from the Shenzhen Stock Exchangelisted companies to examine the relationship between characteristics of listedcompany’s audit committee and quality of accounting information disclosure; Finally,conclusion and limitations, and recommendations for the sound system based on theresults in this paper. The empirical results show that:(1)Audit committee financial expertise cansignificantly improve the quality of accounting information disclosure. Moreover,financial experts form the non-management inside directors, as well as the financialexperts of independent directors also play a significant role; but financial experts fromthe management inside directors have no such effect.(2)Having managementmemberin the audit committee will reduce audit committee effectiveness, notcontribute to improving the quality of information disclosure. The positive relationbetween audit committee independence and the quality of accounting informationdisclosure is not statistically significant.(3)Compared with those companies that themanagement is involved in the director-selection process, theother companies’auditcommittee independence and independent director’s financial expertise are morehelpful to improve the quality of information disclosure.(4)Moreover, the positiverelation between audit committee size and the quality of accounting informationdisclosure is not statistically significant, as well as the positive relation between auditcommittee meetings and the quality of accounting information disclosure.The research results of this paper have some theoretical and practicalsignificance: firstly, most of the existing research does not consider the identity ofnon-independent directors in audit committee (whether from management members,whether it is anfinancial expert). For example, they mainly focused on auditcommittee independence’s and financial expertise’s influence on the quality offinancial reporting, earnings management and the quality of information disclosure.Among these researches, they often only used the proportion of independent directorsas substitution variables of audit committee independence, the proportion of financialexperts as audit committee financial expertise. This paper subdivides the relevantcharacteristics of the Audit Committee members, and extends the research of auditcommittee and accounting information disclosure. Secondly, the listed company’sgovernance environment may offset the regulatory efficiency of audit committee;however, relevant domestic research literature does not seem to pay enough attentionto this. For instance, there is little research on the relationship between managementinvolvement in selecting board members and audit committee effectiveness. Thispaper, from the perspective of accounting information disclosure, not only enrichesthis research but also provides useful empirical evidence for the reform of the auditcommittee system and the nomination committee system. Thirdly, the conclusions ofthis paper are useful for the future of corporate governance reform, especially for the reform of audit committee system and audit committee member selection.