An application of the audit committee effectiveness framework on JSE listed companies in South Africa
Date
2021
Authors
Sigauke, Tanyaradzwa
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
The purpose of this study is to determine which characteristics of audit committee
effectiveness (ACE) listed companies are disclosing. This study also assesses whether the
identified characteristics are supportive of ACE. A disclosure index developed using the
framework of Dezoort , Hermanson, Archambeault, and Reed (2002), prior literature, the
reporting guidelines of King IV and the Companies Act was used to identify the audit
committee (AC) characteristics. The research methodology is quantitative in nature and
content analysis was used to identify the AC characteristics in the company’s annual,
integrated, sustainability and AC reports. The results found that the most frequently disclosed
AC characteristic is AC size. This may be because of companies’ awareness that size shows
the resource and power of the AC. Additionally, the industrials sector was perceived to be
most supportive of ACE as it scored the highest perceived audit committee effectiveness
(PACE). The companies in the industrials sector are subjected to immense pressure from
consumers and the press (Van Zijl, Wöstmann, & Maroun, 2017). As a result, the high PACE
score may be an attempt to reduce information asymmetry which is achieved by disclosing to
investor’s quality of the management of risks.
Description
A research report submitted in partial fulfilment of the requirements for the degree of Master of Commerce to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, 2021