EF » EFnet » FELU Research » Audit committees and financial reporting quality: The 8th EUCompany Law Directive perspective

Audit committees and financial reporting quality: The 8th EUCompany Law Directive perspective

22.03.2018Comments are closed.


Audit committee,
Audit committee competencies,
Financial reporting quality,
Corporate governance


  • Dr. Simon Čadež
  • Dr. Ujkan Bajra


In order to increase corporate governance quality, the 8th EU Company Law Directive enacted a mandatory audit committee in publicly listed companies in the EU and defined its tasks and responsibilities. In response to the directive, we examine the incremental value of audit committee monitoring effectiveness and audit committee competencies over the mere existence of an audit committee. We find that audit committee monitoring effectiveness and competencies are positively associated with financial reporting quality, whereas, somewhat surprisingly, the effect of the existence of an audit committee is negative. This finding shows that the existence of audit committees is a necessary but not a sufficient condition for enhancing financial reporting quality. Collectively, the study’s findings suggest that the 8th Directive has had a positive effect on corporate governance quality and, in turn, financial reporting quality in the EU.


Economic systems, 2018, 151-163.



The article is available here.

Related news

Publish your comment:

RSSUpcoming events

Confucius institute Ljubljana is inviting you to webinar on understanding Chinese consumers’ mind-set. Level: Intermediate When? Friday, 5th April 2019, 1 p. m.- 3.30 p. m. ... >>>
Increasingly companies across the EU need access to open innovation ecosystems, to assist upscaling new technologies, product testing and validation support. Industrial research infrastructures, ... >>>
If you like to set the bar high and are up for new, bold goals that challenge you, join us and become a Doctoral student ... >>>