Keep Stricter Audit Committee Standards Flexible, Argues New Study
University of TorontoIndependent, financially-literate audit committees lead to higher firm values and less diversion of resources by management, shows a new study by researchers at the University of Toronto. But the paper, which looked at small companies that voluntarily adopted standards required of larger companies, also says it’s important for regulators to stay flexible around rules requiring high-quality audit committees, particularly for smaller firms that may be hurt by expensive director compensation costs.