Research on the Overlap of Minority Audit Committee Members——Evidence from Auditor Selection of Chinese A-Share Listed Firms
China company law allows the appointment of non-independent directors in audit committee below the half of its members.Based on the function of selecting external auditors,using data from China's A-share listed firms spanning from 2013 to 2022,this paper finds that firms are more likely to hire Big 4 auditor when the minority non-independent directors in audit committees overlap with shareholder entities,particularly non-controlling shareholders.The mechanism lies in enhancing the oversight effectiveness of shareholders.The phenomenon is more obvious in private firms and when the external regulatory scrutiny is weak,what's more,improves audit quality.Conversely,when minority non-independent directors overlap with managers,especially CEO,firms are more reluctant to hire Big 4 auditor.The mechanism lies in intensifying managerial rent-seeking.This paper provides Chinese evidence for the effects of overlap in firm's audit committee,contributing to the further refinement of China's company legal system regarding to the qualifi-cation and obligation of the audit committee.
Audit CommitteeMinority Non-Independent DirectorsOverlapOversight EffectivenessRent-Seeking of Power
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