Audit Committee, Accounting Conservatism and Cost of Capital

• Main Authors: Chih-Yi Chen, 陳智怡
• Other Authors: Yi-Hsing Liao
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/5mzpk3

碩士 === 中原大學 === 會計研究所 === 99 === The development of administration of an enterprise majorly focuses on setting up a functionality committee, like an audit committee, for companies around the world. Currently in Taiwan, this is also listed in the major implementation policies of the Cognizant agency in the government, which supervises the affair of a company’s administration development. In this paper, companies in Taiwan with an audit committed are used as the objects of study to find the effect of this committed on Accounting Conservatism and Cost of Capital. The research uses the ordinary least squares (OLS) regression for data analysis. Based on the analysis result, the following three conclusions are obtained: 1) Setting up an audit committee has a significant positive correlation with the Accounting Conservatism of a company. It indicates that a company with an audit committee has a better Accounting Conservatism since this committee can improve the administration of the company and effectively supervise the finance of the company. 2) Cost of Capital of a company has a significant negative correlation with the Accounting Conservatism. It indicates the increment of the company’s Accounting Conservatism will reduce the benefit conflict between the shareholders and the creditors so that the Cost of Capital of the company will be decreased. 3) Setting up an audit committee has a significant negative correlation with the Cost of Capital of a company. It indicates that problems from agency conflicts can be effectively reduced by the audit committee so that the Cost of Capital of the company will be decreased.