이사회 및 감사위원회의 특성과 회계부정 간의 관계에 관한 실증분석

Since the foreign currency crisis in 1997, IBRD has required the Korean government to take measures such as reformulation of the Korean corporations' governance structure as a means to improve reliability of accounting information and transparency of their management. During the Asian financial crisis, many Korean firms were blamed for their opaque management and family-owned ownership structure. Along with the pressures from overseas, the Korean government supported by civil activist groups has exerted voluntary efforts to improve governance structure of the Korean corporations. These efforts led to the regulation in 1999 that all companies listed in the Korean Stock Exchange(KSE) are obliged to nominate outside directors in their board of directors. Also, to alleviate the severe problem in corporate governance for large Korean conglomerates(so-called Chabol), the Korean government, from 2000, mandated the establishment of audit committees for large companies listed in the stock market. In addition, it became mandatory by the Security Exchange Act in 2000 that the Korean companies, either listed in the KSE or Kosdaq, with total assets in excess of ￦2 trillion launch the audit committees comprising at least 3 directors, and at least 2/3 of the committee members should be elected from outside directors. Concerns about earnings manipulation and recent high-profile accounting scandals have led most of the investing community to call for more effective board and audit committees as a means to improve the quality of financial statements. In response to these calls, the government has adopted regulations on the function of board and audit committees in a number of areas including the independence of their members, their accounting or financial expertise, and their activities. Thus, The role of the board and audit committee in corporate governance is a subject of increasing regulatory interest. This study addresses the impact of certain board and audit committee characteristics on the likelihood of financial statement fraud. We examined how various characteristics of the board of directors and audit committee' governance features affect the occurrence of corporate fraud. This study focuses on board and audit committee characteristics. Such staffing decisions can directly affect the ability of the board and audit committee to monitor management's financial reporting process. We hypothesize that financial statement fraud will be negatively associated with board and audit committee independence, expertise, and activity. This study has implications for numerous parties, such as auditors, investors, regulators, boards of directors, audit committee members, and other corporate governance reform proponents who frequently examine board and audit committee characteristics to assess its effectiveness in monitoring the firm's financial reporting processes. We examine 60 firms which issued fraudulent reports in the period 2000-2005, together with matched pairs control groups of similar year and size. The results of this study are summarized as follows. First, for the board characteristics, we find that when board independence(defined as the percentage of outside directors), board activity(outsider board participation), and board expertise(defined as a board containing at least one outside director with professor) increase, the likelihood of fraudulent financial statement decrease. This suggests that the independent, expertise, and activity directors on the board play a monitoring and controlling function in the context of fraud. Second, for the audit committee characteristics, we find that when audit committee's non-independence(defined as an audit committee containing at least one outside director with grey) increases, the likelihood of a fraudulent financial statement increases and also when audit committee expertise(defined as a board containing at least one outside director with professor) increases, the likelihood of a fraudulent financial statement decreases. Our findings suggest that the composition and structure of a board and audit committee are significantly correlated with the incidence of financial statement fraud. This study makes several contributions to the accounting literature. Its adds to our knowledge of the link between the credibility of the financial reporting system and quality of governance mechanisms by extending research on the causes and consequences of financial statement fraud. This study also provides additional insight into the interaction between the board, the audit committee, and management in the financial reporting process. And the findings of this study also suggest several valuable insights into the composition and regulation of the board and audit committee for the Korean regulators.