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The impact of voluntary audit and governance characteristics on accounting errors in private companies

Clatworthy, Mark Anthony and Peel, Michael John 2013. The impact of voluntary audit and governance characteristics on accounting errors in private companies. Journal of Accounting and Public Policy 32 (3) , pp. 1-25. 10.1016/j.jaccpubpol.2013.02.005

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Abstract

This paper examines the extent to which the audit and corporate governance characteristics of UK private companies are associated with defective accounting information. Despite the economic importance of private firms, relatively little is known about their financial reporting and governance characteristics. Using a large sample of UK private companies, we examine the effects of voluntary audit, board gender balance and financial expertise on the likelihood of errors occurring in published annual accounts. Our results indicate that audited accounts are approximately half as likely as unaudited accounts to contain errors. In addition to contributing to recent academic research in this field, our findings are likely to be of interest to policy makers, who are considering exempting more firms from mandatory audit. We also find that gender diversity among board members is positively associated with the accuracy of accounting information, though our primary measure of directors’ financial expertise has no significant effect.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Additional Information: Special Issue on Accounting and Corporate Governance
Publisher: Elsevier
ISSN: 0278-4254
Last Modified: 14 Jan 2018 21:26
URI: http://orca.cf.ac.uk/id/eprint/47150

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