The relationship between audit committee characteristics and financial statement quality: evidence from Belgium

The Belgian Corporate Governance Code was published in 2004 and updated in 2009 to provide standards of good practice. Since 2008, Belgian law has imposed the creation of an audit committee for all listed firms. There are many published, empirical studies that focus on the relationship between audit committee characteristics and financial statement quality. However, to the researchers’ knowledge, this study is the first to consider this relationship in a Belgian context, given that audit committees are a new phenomenon in this country. This paper investigates whether the audit committee characteristics suggested in the literature, in the Corporate Governance Code and in the law affect financial statement quality. Data from 2008 and 2009 are used for 60 Belgian firms that have established an audit committee. This empirical study demonstrates a positive and significant association between the proportion of audit committee members concurrently holding more than three directorships and financial statement quality. It also finds evidence that audit committee independence is positively and significantly related to financial statement quality. Several additional analyses are also performed. Copyright Springer Science+Business Media New York 2015