| Summary: | 碩士 === 國立成功大學 === 會計學系 === 105 === We test the relationship between earnings quality and audit committee interlocking. First, our empirical result shows that audit committee can improves earnings quality significantly no matter it was established voluntarily or mandatorily. Then we find that firms which were interlocked by their audit committee (or interlocked by member of audit committee who is financial/accounting expertise) are most likely to manage earnings, but there is no significant association with earnings quality when they have director interlocking or independent director interlocking. Furthermore, the result shows that the strength of director interlocking, the strength of independent director interlocking, and the strength of audit committee interlocking impair earnings quality. Finally, we investigate whether earnings management spreads between firms via audit committee interlocking, and the result shows that “information accepted firm” is less likely to manage earnings when it’s audit committee members got a high score from “information sending firm” which had high quality of earnings in previous period.
Our findings support the view that audit committee is the most important position in monitoring firms’ financial reports. We provide evidence to prove that the direction of the reform of Taiwan’s corporate governance is correct. We also show the reason why Financial Supervisory Commission ask no independent director of a public company may concurrently serve as an independent director of more than three other public companies.
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