Title: Audit committee interlocking and internal controls over financial reporting: an examination of different audit committee roles

Authors: Ahmad Hammami; Alexey Lyubimov

Addresses: John Molson School of Business, Concordia University, 1455 de Maisonneuve Blvd. W., MB 15.323, Montreal, Quebec, H3G 1M8, Canada ' John Molson School of Business, Concordia University, 1455 de Maisonneuve Blvd. W., MB 15.323, Montreal, Quebec, H3G 1M8, Canada

Abstract: This study investigates the relationship between audit committee (AC) interlocking and the effectiveness of internal controls over financial reporting (ICFR) while differentiating between chair and non-chair connections. Chen et al. (2017) point out that the effect of corporate governance on the system of internal controls has been largely overlooked by extant research. Khemakhem and Fontaine (2019) discuss the fact that the audit committee chair role, while key in corporate governance, is largely ignored by researchers. The results show that the effects of interlocks vary based on the interlocking medium, where companies are more likely to have effective ICFR if they are interlocked through the AC chair with other companies that have effective ICFR. No significant impact is observed for interlocks through the non-chair members. Furthermore, the results do not show a significant relationship for interlocks with companies with ineffective controls.

Keywords: audit committee; internal control; corporate governance; audit committee chair.

DOI: 10.1504/IJCG.2021.121276

International Journal of Corporate Governance, 2021 Vol.12 No.3/4, pp.254 - 282

Received: 23 Oct 2020
Accepted: 13 Sep 2021
Published online: 03 Mar 2022 *

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