Audit committee oversight of external audit: an examination of structural power and behavioural tactics

Abstract

PurposeThis study aims to examine the structural power wielded by the audit committee (AC) and the various bases of its power, whilst also exploring the behavioural tactics used by the AC to leverage its power in the oversight of the external audit. Design/methodology/approachEmpirical evidence was drawn from semi-structured interviews with external auditors and AC members in Malaysia. FindingsThe AC’s structural power is derived from its formal and network position in the organisation. The AC possesses three forms of organisational-based power (legitimate, coercive and informational) resultant from its formal position, and these combine with the AC’s personal power (will and expert). The AC uses its personal power base to develop trusting relationships and to promote the exchange of information with other key corporate governance actors in the network position. Furthermore, the AC applies at least four behavioural tactics (assertiveness, ingratiation, rationality and coalition formation) to exercise its bases of power. Originality/valueThis study attempts to describe the AC’s structural sources of power, its organisational and personal power bases, and the behavioural tactics it uses when exerting its power.