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Agency Assurance : The Role of the Audit Committee in Corporate Governance
Lo Bue, Robert
Audit Committee; Agency-Theorie; Corporate Governance; Publizität
DDC (Dewey Decimal Classification)
Wirtschaft - 330
Freie Stichwörter (deutsch)
Freie Stichwörter (englisch)
Audit Committee, Agency Theory, Knowledge Management, Financial Statements; Corporate Governance
The incidence and recurrence of fraud, omission, and error at many of the world’s largest and most admired corporations have led the way to attempts at reform through external legislative and regulatory means. This dissertation presents options for reform of the audit committee that are directed at identifying and removing structural obstacles to corporate governance of an internal firm nature. The overall goal is to assist boards of directors in meeting the highly raised expectations for their performance in the 21st century.
Corporate and society leaders should be looking for effective methods of both bonding and monitoring, in an appropriate balance, for governance activities. Boards are small organizational groups who have limited time to engage in their responsibilities. Therefore, they are fully dependent on management-supplied information (MSI) to be productive and effective. However, agency theory predicts that high conflicts of interest will impede information quality. The extremely high compensation for top executives and investment analysts has assisted in raising the transparency barrier standing between management and stakeholders.
The agency assurance model introduced here specifically directs the audit committee operationally in three areas: 1. constitution – examining its purpose, character, and rights for effective oversight of MSI; 2. classification – employing knowledge management, accounting principles, and transaction costs for relevant development of MSI; and 3. communication – enhancing transparency, channels, and shareholder relations for fair distribution of MSI.
In respect to these three factors, the audit committee can play a central role in improving the verification, validation, and vetting of MSI to lower the transparency barrier; strengthen the governance environment; and improve board, management, and firm performance.
The agency assurance model asks the audit committees to concern themselves with the goal of identifying and attaining the true and fair view of firm results for the users of MSI. The concept of differentiation costs is offered to support the true and fair view by requiring the recognition of the costs incurred in development or acquisition of most forms of explicit knowledge as official assets in the audited financial statements.
Strategic management theory and value-based reporting place great worth on many of these differentiation costs related to development of intangible assets, while today’s accounting principles continue to leave most of them unrecognized.
Hilb, Martin (Prof. Dr.)
Dubs, Rolf (Prof. Dr. Dres. h.c.)
Erweitertes Diss. Komitee
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