Dan Dhaliwal, Vic Naiker, and Farshid Navissi recently posted a paper up on SSRN titled “The Association between Accruals Quality and the Characteristics of Accounting Experts and Mix of Expertise on Audit Committees.” Their research looks at post-SOX data and various characteristics of audit committees that have an impact on accrual quality.

“Our results indicate a positive relationship between accruals quality and audit committee accounting experts who are independent, hold fewer multiple directorships, and have lower tenure in their firms. Furthermore, the results suggest that the most positive effect of accounting expertise on accruals quality is achieved when accounting expertise is combined with finance expertise in audit committees. Supervisory expertise, on the other hand, seems to have no incremental impact on the effectiveness of audit committees that include accounting and finance expertise. The findings highlight the contextual nature of accounting expertise in overseeing the quality of financial reporting.”

I found the idea of mixed expertise interesting. In my accounting classes I’ve frequently heard that accounting expertise is essential for audit committee effectiveness, but I’ve never considered the value that other types of financial expertise may provide.