Date of Award

2025

Document Type

Dissertation

Degree Name

PhD in Accountancy

Department

Department of Accountancy

First Advisor

Gopal V. Krishnan

Second Advisor

Ronen Gal-Or

Third Advisor

Changjiang Wang

Abstract

With the increasing complexity of the business environment, the role of corporate governance and oversight is expanding continuously. Grounded in archival research, my dissertation consists of three studies that explore the features of audit committees in monitoring both financial reporting and broader areas, such as cybersecurity.

The first paper, co-authored with Gopal Krishnan and Wei Yu, examines the implications of audit committee (AC) director departure for financial reporting quality and audit risk. We find that the departures in the firms with most concerning AC departures are associated with a higher likelihood of a future “Big R” restatement announcement and auditor resignation than firms not associated with director departures. Next, the most concerning and somewhat concerning AC departures are associated with material weaknesses in a firm’s internal controls. Voluntary departures are associated with subsequent increases in audit fees. These results contribute to the limited literature on the usefulness of disclosure around changes in governance, particularly board oversight.

The second paper, co-authored with Gopal Krishnan and J. Philipp Klause, examines the relation between compensation to audit committee (AC) directors and AC effectiveness in monitoring financial reporting quality. We find that companies have lower accrual quality and greater financial statement errors when AC directors earn below market compensation. On the other hand, there is a lower likelihood of earnings manipulation and fraud when AC directors earn excess compensation. Further, measures of real activities management are also lower when AC directors earn excess compensation. Overall, the results contribute to board compensation literature.

The third paper, sole-authored, examines whether audit committee (AC) characteristics and expertise are associated with companies’ responses to cyber breaches. This paper documents that AC size is significantly related to the reduction of discovery days; ACs with legal experts are associated with higher breach costs; and IT experts in ACs are related to a reduction in the records lost in a cyber breach. Additionally, non-AC legal experts are associated with a reduction in disclosure days; larger and shorter-tenured boards with more internal directors are associated with lower breach cost. This study contributes to limited research on governance in cybersecurity risk management.

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