Manager Attributes, Firm Characteristics, and Audit Committee Independence: Evidence from the Canadian Context

Abstract

To improve the information quality and defend investors’ interests, the current challenge is no longer only to set up an audit committee, but also to ensure its independence. Nevertheless, this independence is not always guaranteed and it depends on several factors. The study aims to identify the determinants of the audit committee independence. We identify factors linked to the manager attributes and factors linked to the firm characteristics. The empirical study is drawn on a sample of Canadian firms over a period of five years. The results show that the independence of the audit committee is negatively related to the size of the board of directors and to the presence of the manager within the remuneration committee. Furthermore, independence of the audit committee seems to be positively linked to the independence of the board of directors and the existence of intangible assets.