The recent international growth of mandatory audit committee requirements

  • Jason Royce Fichtner
Original Article

Abstract

This article explores the growth in the number of countries who now mandate that listed companies establish audit committees to improve their financial reporting process. By reviewing the current and historical company laws and major stock exchange listing requirements for each of the world's 40 largest capital markets, this article finds a significant increase in the number of countries who now, post-Sarbanes–Oxley, mandate that boards of directors establish a subcommittee to monitor their company's accounting and auditing processes. Specifically, it reveals that while only 10 of the world's 40 largest capital markets required audit committees when the United States enacted the Sarbanes–Oxley Act of 2002, this number has now grown to 31. This article offers insight to policy makers interested in amending company laws or stock exchange listing requirements to coincide with the corporate governance standards found in the world's major capital markets. It is also useful to corporate managers planning to enter new capital markets. Academic readers will benefit from the historical review of the growth of mandatory audit committees and the review of the academic literature studying the effectiveness of audit committees.

Keywords

corporate governance audit committees company law Sarbanes–Oxley 

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Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Ltd 2009

Authors and Affiliations

  • Jason Royce Fichtner
    • 1
  1. 1.College of Business and Public Administration, Drake UniversityDes MoinesUSA

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