Boards Manipulate Financial Reporting by Appointing Weak Auditors
The study looked at how companies choose new Audit Committee Members to improve their financial reporting quality. They found that companies tend to pick new members with similar financial reporting skills to their own. Companies that choose members with weaker financial reporting skills often see a decrease in their financial reporting quality. Additionally, companies with very different financial reporting skills from their new members tend to see a bigger drop in their financial reporting quality.