VOLUNTARY DECISIONS ON AUDIT COMMITTEE COMPOSITION AND EXPERTISE AND THE INFLUENCE OF BOARD OF DIRECTOR CHARACTERISTICS: FURTHER EVIDENCE FROM SINGAPORE

Download This Article

Mitchell Van der Zahn ORCID logo, Inderpal Singh

https://doi.org/10.22495/cbv1i2art4

Abstract

Our study empirically examines the association between four board of director characteristics and two audit committee dimensions. The audit committee dimensions are the level to which Singapore publicly listed firms voluntarily (1) include more independent directors on their audit committee beyond the mandatory minimum majority of independent directors and (2) improve the collective knowledge and experience of this standing committee by including
suitably qualified independent directors. Our analysis is based on hand collected data from 430 domestically incorporated firms listed on the Singapore Stock Exchange (SGX) at the end of 2003. We find Singapore publicly traded firms are likely to voluntarily include more independent directors on their audit committees beyond the mandated minimum majority
when (1) the size of the board of directors increases, (2) firms segregate the positions of Chief Executive Officer (CEO) and Chairperson of the board, and (3) the proportion of independent directors serving on the board of directors increases. The percentage of independent directors with directorate interlocks appears not to influence a firm’s decision to voluntarily include more independent directors on their audit committees. We also find a statistically significant association between (1) duality (negative) and (2) percentage of independent directors with directorate interlocks (positive) and propensity for Singapore firms to voluntarily increase the collective knowledge and experience of the audit committee’s independent directors. Contrary
to expectations board size and the proportion of independent directors are not significant determinants.

Keywords: Audit committees; board of director characteristics; audit committee composition; Singapore

How to cite this paper: Van der Zahn, J-L. W. M., & Singh, I. (2005). Voluntary decisions on audit committee composition and expertise and the influence of board of director characteristics: Further evidence from Singapore. Corporate Board: role, duties and composition, 1(2), 49-65. https://doi.org/10.22495/cbv1i2art4