Title: Does foreign ownership affect audit committee adoption? Evidence from Brazilian companies

Authors: Lucas Felice Cervo; Clea Beatriz Macagnan; Daniel Francisco Vancin; Cristiano Machado Costa

Addresses: University of Vale do Rio dos Sinos, Porto Alegre-RS, 91.330-002, Brazil ' University of Vale do Rio dos Sinos, Porto Alegre-RS, 91.330-002, Brazil ' University of Vale do Rio dos Sinos, Porto Alegre-RS, 91.330-002, Brazil ' University of Vale do Rio dos Sinos, Porto Alegre-RS, 91.330-002, Brazil

Abstract: The aim of this paper is to verify whether the voluntary constitution of the audit committee in companies listed in the Brazilian stock market could be explained by the presence of foreign stockholders. The method used was a probit model with instrumental variables, and the results confirmed the hypothesis, indicating that there is an U-shaped relationship: the probability of adoption of the audit committee slightly decreases at low levels of foreign participation and increases after reaching a cutoff level. This result is in line with previous literature on the role of foreign investors in improving corporate governance in companies in developing countries to protect themselves from expropriation by local stockholders and managers.

Keywords: voluntary audit committee. foreign stockholders; corporate governance; monitoring; determinants.

DOI: 10.1504/IJAAPE.2023.133042

International Journal of Accounting, Auditing and Performance Evaluation, 2023 Vol.19 No.3, pp.360 - 383

Received: 08 Jul 2020
Accepted: 19 Apr 2021
Published online: 28 Aug 2023 *

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