Sarah Stein, Kim Walker, Karneisha Wolfe and their coauthor Lauren Cunningham of the The University of Tennessee are the 2023 recipients of the AAA Auditing Section Best Behavioral Paper Award.

Sarah Cunningham, Karneisha Wolfe, Sarah Stein, and Kimberly Walker receive AAA Auditing Section Best Behavioral Paper Award
Front row: Karneisha Wolfe, Sarah Stein and Kim Walker. Second row: Lauren Cunningham and award presenters.

While the audit committee’s traditional responsibilities include oversight of external/internal auditors and other financial reporting-related functions, many audit committees are taking on additional oversight responsibilities related to enterprise risk management (ERM), cybersecurity, and environmental, social and governance (ESG) reporting. Since these additional responsibilities are not assigned uniformly across all boards, stakeholders must rely on public disclosures to understand board risk oversight and gain assurance that audit committees are fulfilling their fiduciary duties. This study uses a qualitative, interview-based approach to show that most companies develop disclosures based on peer benchmarking, which results in standardized language rather than conveying information to help investors distinguish audit committee quality. Signaling theory allows the authors to identify the key breakdown in the disclosure cycle that led to these current practices: companies do not receive feedback about the usefulness of audit committee disclosures from investors. Thus, companies feel like investors are satisfied with existing disclosures while investors are frustrated that companies provide so little information about the audit committee. This study provides suggestions for moving forward that the authors hope will be of interest to preparers, users, and regulators of governance disclosures.

AAA Auditing Section Best Behavioral Paper Award

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