The Impact Of Audit Committee Multiple-Directorships On Earnings Management: Evidence From France

Abstract

The aim of this paper is to examine the relationship between Audit Committee Multiple-Directorships and earnings management. Precisely, we empirically investigate the effect of the multiple directorships held by audit committee directors on the level of earnings management of listed French companies. Our investigation has been achieved on a sample of 88 non financial French listed firms that belong to the SBF 120 index, for the financial year 2008. The results suggest that the accumulation of several outside directorships by audit committee members may lead to a higher degree of earnings management, as measured by the magnitude of discretionary accruals. Therefore, our findings show that audit committee cant provide effective monitoring of earnings management when its members held many additional outside directorships.