The impact of audit committee information technology expertise on the reliability and timeliness of financial reporting

Musaib Ashraf, Paul N. Michas, Dan Russomanno

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

We examine whether information technology expertise on audit committees impacts the reliability and timeliness of financial reporting. We find a reduction in the likelihood of material restatement, a reduction in the likelihood of information technology-related material weaknesses (which account for 55 percent of all reported material weaknesses), and more timely earnings announcements at firms with audit committee information technology expertise. These findings are robust to controlling for a firm's other information technology attributes, as well as when using entropy balanced samples, and we mitigate endogeneity concerns with evidence that our findings hold in a subsample of firms that all possess overall high-quality information technology. Finally, a difference-indifferences analysis, inclusion of firm fixed effects, and a falsification test largely support our assertion that the quality of financial reporting is significantly improved by the presence of an audit committee information technology expert.

Original languageEnglish (US)
Pages (from-to)23-56
Number of pages34
JournalAccounting Review
Volume95
Issue number5
DOIs
StatePublished - Oct 18 2019

Keywords

  • Audit committee
  • Board of directors
  • Corporate governance
  • Financial reporting reliability
  • Financial reporting timeliness
  • Information technology

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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