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Audit Committee Characteristics and Cost of Equity Capital: An Empirical Test of Resource Dependence Theory (RTD)
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Abstract: (522 Views) |
| According to the resource dependency theory (RTD), the company's executive branch can be influenced by external factors. Also, according to this theory, the Audit Committee serves as a consultancy resource for the board with the goal of providing valuable resources. As a result, effective and efficient system management can play an important role in reducing the risk of shareholders and improving the quality of financial information through the design and deployment of strong monitoring mechanisms. The risk reduction of shareholders also leads to lowering their required returns, or the cost of equity capital. Accordingly, the purpose of this study is to study the impact of the audit committee's characteristics (size, independence, financial expertise and gender diversity) as one of the regulatory bodies of companies on their capital cost. In order to achieve this goal, the data of 152 companies admitted to Tehran Stock Exchange during 2012 to 2017 were tested using regression analysis with combined data approach. The research findings showed that there is a significant relationship between the size of the audit committee and the gender diversity of the members of the audit committee with the cost of corporate capital, but there was no significant relationship between the independence and expertise of the members of the audit committee and the cost of capital companies. |
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| Keywords: Audit Committee, Capital Cost, Expertise, Gender Diversity, Independence, Size. |
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Full-Text [PDF 555 kb]
(168 Downloads)
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Type of Study: Research |
Subject:
Auditing
Received: 2019/04/6 | Accepted: 2019/07/6 | Published: 2020/08/31
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