Title

Audit committees, corporate governance, and shareholder wealth: Evidence from Korea

Authors

Authors

Y. K. Choi; S. H. Han;S. Lee

Comments

Authors: contact us about adding a copy of your work at STARS@ucf.edu

Abbreviated Journal Title

J. Account. Public Policy

Keywords

ASIAN FINANCIAL CRISIS; DIVERSIFIED BUSINESS GROUPS; INTERNAL; CAPITAL-MARKETS; FIRM VALUE; INDEPENDENCE; DIRECTORS; CHAEBOLS; BOARD; PERFORMANCE; MANAGEMENT; Business, Finance; Public Administration

Abstract

This paper examines the effect of audit committee appointments on shareholder wealth in Korea after the Asian financial crisis. We find that stock prices generally increase with audit committee appointments. In contrast, chaebol (business group) affiliates and firms switching audit committee membership are associated with significantly lower stock returns, probably due to the management's opportunistic behavior. However, the independence and financial literacy of the audit committee members appear to mitigate the opportunistic behavior. Therefore, our result confirms that the characteristics of the audit committee strengthen or weaken the existing corporate governance. We discuss the implications of our results obtained under Korea's unique corporate governance structure. (C) 2014 Elsevier Inc. All rights reserved.

Journal Title

Journal of Accounting and Public Policy

Volume

33

Issue/Number

5

Publication Date

1-1-2014

Document Type

Article

Language

English

First Page

470

Last Page

489

WOS Identifier

WOS:000343371900003

ISSN

0278-4254

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