|a內稽主管異動的意涵|dThe Implication of Chief Audit Executive Switching|f廖予媗撰
|uUnderstanding the implications and consequences of Chief Audit Executive (CAE) switching is especially important because the CAE plays a vital role in determining whether the internal audit function (IAF) is able to act effectively to protect shareholder interests and strengthen corporate governance. My findings provide evidence that CAE switching events are associated with quality financial reporting, this is especially in the case with that firms did not switch their financial reporting gatekeepers (auditor and accounting supervisor). In the following analyses, I rule out accounting-related switching cases because possible switching noisy-signals may bias empirical results and lead to improper inferences. This study thus focuses on firms that did not change their financial reporting gatekeepers (auditor and accounting supervisor) and provides insight into the corresponding economic consequences. Notably, my findings show that CAE switching events increase market participants’ perceived risk and, therefore, are associated with a market valuation that tends to be negative. However, market participants tend to regard independent audit committees (ACs) as having an effective supervising role when it comes to financial reporting quality, moderating the influence of CAE switching. Additionally, this study considers ownership-related effects because ownership-based management plays a major role in Taiwan’s business environment. My findings reveal that market participants react positively to CAE switching events with respect to family-controlled and CEO-duality firms, at least when their ACs have a greater proportion of independent directors, implying that market participants may interpret such switching as signals of improved internal audit effectiveness and enhanced financial reporting quality. I also consider auditors’ risk perceptions and find that CAE switching firms are more (less) likely to receive unclean opinions when their ACs come with lower-independence (higher-independence).
|aThe Implication of Chief Audit Executive Switching