Indian Journal of Finance

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Regulatory Changes and Role of Audit Committee : Indian Evidence


Affiliations
1 PhD Scholar, Manipal Academy of Higher Education, Manipal - 576 104, Karnataka & Faculty Associate, T A Pai Management Institute, Manipal - 576 104, Karnataka, India
2 Professor, T A Pai Management Institute, P.B. No. 9, Manipal - 576 104, Karnataka, India

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Corporate governance reforms have emphasized on the need for an audit committee and expanded its role and responsibilities over the last two decades. The purpose of this study was to examine the evolution of audit committee and document changes in audit committee’s composition and responsibilities in the Indian context. This article investigated the impact of regulatory changes on audit committee composition in terms of size, independence, and meeting frequency from 2003 – 2018. This study found that the size of the audit committee and its meeting frequency has increased over the years. Our findings suggested that in the absence of mandatory compliance regarding independence of audit committee, we saw a considerable decline in fully independent audit committees. We also documented increased presence of executive directors on audit committee.

Keywords

Audit Committee, Financial Reporting, Auditing, Risk Management, Corporate Governance, SEBI Clause 49, Disclosure.

JEL Classification : G34, G38, M480, N24.

Paper Submission Date : February 10, 2020; Paper Sent Back for Revision : November 5, 2020; Paper Acceptance Date : December 24, 2020; Paper Published Online : March 15, 2021.

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  • Regulatory Changes and Role of Audit Committee : Indian Evidence

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Authors

Savitha Heggede
PhD Scholar, Manipal Academy of Higher Education, Manipal - 576 104, Karnataka & Faculty Associate, T A Pai Management Institute, Manipal - 576 104, Karnataka, India
Aditya Mohan Jadhav
Professor, T A Pai Management Institute, P.B. No. 9, Manipal - 576 104, Karnataka, India

Abstract


Corporate governance reforms have emphasized on the need for an audit committee and expanded its role and responsibilities over the last two decades. The purpose of this study was to examine the evolution of audit committee and document changes in audit committee’s composition and responsibilities in the Indian context. This article investigated the impact of regulatory changes on audit committee composition in terms of size, independence, and meeting frequency from 2003 – 2018. This study found that the size of the audit committee and its meeting frequency has increased over the years. Our findings suggested that in the absence of mandatory compliance regarding independence of audit committee, we saw a considerable decline in fully independent audit committees. We also documented increased presence of executive directors on audit committee.

Keywords


Audit Committee, Financial Reporting, Auditing, Risk Management, Corporate Governance, SEBI Clause 49, Disclosure.

JEL Classification : G34, G38, M480, N24.

Paper Submission Date : February 10, 2020; Paper Sent Back for Revision : November 5, 2020; Paper Acceptance Date : December 24, 2020; Paper Published Online : March 15, 2021.


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DOI: https://doi.org/10.17010/ijf%2F2021%2Fv15i3%2F158126