Audit Committee Financial Experts: Leveraging Their Information Advantage in Accounting, Auditing, and Corporate Governance
To enhance financial reporting quality through increased oversight, the Sarbanes–Oxley Act (SOX) Section 407 mandates that firms disclose whether their audit committee includes a financial expert or explains the absence of such an expert. The definition of a financial expert has been broadened to en...
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| Format: | Article |
| Language: | English |
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MDPI AG
2025-04-01
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| author | Zachery (Ziqi) Ma Linna Shi Katherine (Kexin) Yu Nan Zhou |
| author_facet | Zachery (Ziqi) Ma Linna Shi Katherine (Kexin) Yu Nan Zhou |
| author_sort | Zachery (Ziqi) Ma |
| collection | DOAJ |
| description | To enhance financial reporting quality through increased oversight, the Sarbanes–Oxley Act (SOX) Section 407 mandates that firms disclose whether their audit committee includes a financial expert or explains the absence of such an expert. The definition of a financial expert has been broadened to encompass not only accounting knowledge but also finance or supervisory experience. Financial experts on audit committees possess an advantage in information access due to their role on the committee and an advantage in information processing because of their superior skills. This combination of skills and access to private information enables audit committee financial experts to achieve superior performance. We review articles that show audit committee financial experts leveraging their information advantage in accounting to improve financial transparency, in auditing to maintain audit integrity, and in corporate governance to enhance monitoring effectiveness. |
| format | Article |
| id | doaj-art-58bdba2e853d4e1eb3a7a7ee41b66da1 |
| institution | Kabale University |
| issn | 2673-8392 |
| language | English |
| publishDate | 2025-04-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Encyclopedia |
| spelling | doaj-art-58bdba2e853d4e1eb3a7a7ee41b66da12025-08-20T03:24:35ZengMDPI AGEncyclopedia2673-83922025-04-01525510.3390/encyclopedia5020055Audit Committee Financial Experts: Leveraging Their Information Advantage in Accounting, Auditing, and Corporate GovernanceZachery (Ziqi) Ma0Linna Shi1Katherine (Kexin) Yu2Nan Zhou3Department of Accounting, Lindner College of Business, University of Cincinnati, 2906 Woodside Drive, Cincinnati, OH 45221, USADepartment of Accounting, Lindner College of Business, University of Cincinnati, 2906 Woodside Drive, Cincinnati, OH 45221, USADepartment of Accountancy, Lumpkin College of Business and Technology, Eastern Illinois University, 600 Lincoln Avenue, Charleston, IL 61920, USADepartment of Accounting, Lindner College of Business, University of Cincinnati, 2906 Woodside Drive, Cincinnati, OH 45221, USATo enhance financial reporting quality through increased oversight, the Sarbanes–Oxley Act (SOX) Section 407 mandates that firms disclose whether their audit committee includes a financial expert or explains the absence of such an expert. The definition of a financial expert has been broadened to encompass not only accounting knowledge but also finance or supervisory experience. Financial experts on audit committees possess an advantage in information access due to their role on the committee and an advantage in information processing because of their superior skills. This combination of skills and access to private information enables audit committee financial experts to achieve superior performance. We review articles that show audit committee financial experts leveraging their information advantage in accounting to improve financial transparency, in auditing to maintain audit integrity, and in corporate governance to enhance monitoring effectiveness.https://www.mdpi.com/2673-8392/5/2/55audit committee financial expertiseSarbanes–Oxley Act (SOX) Section 407accountingauditingcorporate governance |
| spellingShingle | Zachery (Ziqi) Ma Linna Shi Katherine (Kexin) Yu Nan Zhou Audit Committee Financial Experts: Leveraging Their Information Advantage in Accounting, Auditing, and Corporate Governance Encyclopedia audit committee financial expertise Sarbanes–Oxley Act (SOX) Section 407 accounting auditing corporate governance |
| title | Audit Committee Financial Experts: Leveraging Their Information Advantage in Accounting, Auditing, and Corporate Governance |
| title_full | Audit Committee Financial Experts: Leveraging Their Information Advantage in Accounting, Auditing, and Corporate Governance |
| title_fullStr | Audit Committee Financial Experts: Leveraging Their Information Advantage in Accounting, Auditing, and Corporate Governance |
| title_full_unstemmed | Audit Committee Financial Experts: Leveraging Their Information Advantage in Accounting, Auditing, and Corporate Governance |
| title_short | Audit Committee Financial Experts: Leveraging Their Information Advantage in Accounting, Auditing, and Corporate Governance |
| title_sort | audit committee financial experts leveraging their information advantage in accounting auditing and corporate governance |
| topic | audit committee financial expertise Sarbanes–Oxley Act (SOX) Section 407 accounting auditing corporate governance |
| url | https://www.mdpi.com/2673-8392/5/2/55 |
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