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Politically Connected Audit Committees, Earnings Quality and External Financing: Evidence from Korea

Politically Connected Audit Committees, Earnings Quality and External Financing: Evidence from Korea Using listed firms with audit committees in the Korea Composite Stock Price Index (KOSPI) market, we find that firms with a politically connected audit committee have higher earnings quality than those without such connections. We also find that firms with a politically connected audit committee have better access to equity financing, but obtain a larger amount of funds only when their earnings quality is higher. Overall, contrary to popular concerns over the negative influence of political connections, our results suggest that audit committees having political connections fulfil their crucial oversight duties. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asia-Pacific Journal of Financial Studies Wiley

Politically Connected Audit Committees, Earnings Quality and External Financing: Evidence from Korea

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Publisher
Wiley
Copyright
Copyright © 2017 Korean Securities Association
ISSN
2041-9945
eISSN
2041-6156
DOI
10.1111/ajfs.12182
Publisher site
See Article on Publisher Site

Abstract

Using listed firms with audit committees in the Korea Composite Stock Price Index (KOSPI) market, we find that firms with a politically connected audit committee have higher earnings quality than those without such connections. We also find that firms with a politically connected audit committee have better access to equity financing, but obtain a larger amount of funds only when their earnings quality is higher. Overall, contrary to popular concerns over the negative influence of political connections, our results suggest that audit committees having political connections fulfil their crucial oversight duties.

Journal

Asia-Pacific Journal of Financial StudiesWiley

Published: Aug 1, 2017

Keywords: ; ; ;

References