Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5109399 | Journal of Business Research | 2017 | 15 Pages |
Abstract
This paper analyses the relationship between the presence of financial experts on audit committees and the levels of insolvency risk in the banking sector. The main contribution is the introduction of banking sector regulation and ethical policies as moderators of this relationship. By using a sample of 159 banks from different countries for the period 2004-2010, empirical results suggest that the presence of financial experts on audit committees is useful to reduce insolvency risk, supporting the monitoring advantage hypothesis of financial expertise. This relationship is stronger when banking sector regulation is weaker and also in banks with stronger policies against unethical practices. These findings suggest that financial expertise substitutes regulation and complements ethical policies in reducing insolvency risk.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Business and International Management
Authors
Isabel-MarÃa GarcÃa-Sánchez, Emma GarcÃa-Meca, Beatriz Cuadrado-Ballesteros,