Abstract

Title: Audit committee impact on the credibility of sustainability reporting: A quantitative study of 298 public companies in a low-litigation context.

Level: Student thesis, final assignment for Bachelor Degree in Business Administration 

Authors: Albin Eriksson, Philip Lindholm

Supervisor: Jan Svanberg

Date: 2022-05-31

Aim: The existence of externally assured sustainability reporting by a third party, have in previous studies been interpreted as essential by bigger companies since they, in their stakeholder’s eyes, wish to appear as reliable and legitimate. This because the auditors that review the reporting are characterized by an independence towards the company. Since previous studies have only been implemented within an institutional context characterized by greater risk in case of wrongdoings it becomes interesting to compare these results with an environment where auditors have more space to act. The purpose of this study is therefore to examine whether audit committees review of sustainability reporting affects its reliability in a different institutional context, namely a lower litigation level than in the subject's existing literature.

Method: The study is based on the positivist philosophy of research with a hypothetical-deductive approach. The study has a quantitative strategy where 298 listed companies are the basis for secondary data generated from the database Thomson Reuters Eikon. Furthermore, the data material has been processed and analyzed in the statistical program SPSS. 

Result and Conclusions: The results of the study show a positive relationship between the audit committees external review and the reliability of sustainability reports. We also find that financial expertise within audit committees is positively related to the reliability of sustainability reports. The independence of the audit committees within the institutional context of the study is indicated to have a negative relationship with the reliability of sustainability reports.

Contribution of the thesis: The study fills the research gap for audit committees impact on sustainability reporting in a low-litigation context. The study also benefits the literature on the relationship between the characteristics of audit committees and the reliability of sustainability reports, at the same time as it intends to form the basis for future research. The results contribute valuable theoretical information to the business economics research regarding the connection between external review and the company’s legitimacy.

Suggestions for future research: Suggestions for further research are to carry out a similar type of study within this institutional context where several of the audit committees main characteristics are taken into account, as this may have a different impact on reliability.

Key words: SRA, sustainability reporting, audit committees and low-litigation 

Title: The relationship between Key Audit Matters and Audit Committees: A quantitative study on 310 Swedish companies.

Level: Master Programme in Business Administration, Accounting.

Author: Albin Eriksson and Emilia Thunell

Supervisor: Asif M Huq

Date: 2023 - May

Aim: The purpose of this thesis is to see how the quality of the audit committee relates to the number of key audit matters in the audit report. The quality of the audit committee will be determined through meeting frequency, independence in the audit committee, size of the committee, diversity in the committee, if the members are getting remuneration explicit for being in the audit committee, how many words that describe the work of the audit committee in the annual reports, and if the committee is separated from the board of directors, so-called dedicated.

Method: This is a quantitative study that has been conducted with descriptive statistics, correlation analysis, VIF analysis, multivariate regression, univariate regression, and a Poisson regression to ensure the result in the multivariate analysis.

Results and conclusions: The result of this thesis shows a significant relationship between our dependent variable key audit matters and two of our independent variables, meeting frequency and remuneration. The conclusion is that the institutional structure can have an impact on the audit committee's effect on key audit matters, since Swedish companies already have a lot of corporate governance mechanisms, which can mean that companies get more ineffective in having an audit committee. 

Contribution of the thesis: The theoretical contribution is a broad view on the characteristics effect on key audit matters, and a contribution to the research in a strong institutional structure. The practical contribution is that companies can use this study to evaluate if they need an audit committee or not. 

Suggestions for future research: Suggestions for future research is to examine more EU countries, to see if EU regulations have a major impact on companies corporate governance, or if the institutional differences in the different countries have a bigger impact. 

Key words: Key Audit Matters, Audit Committee, Agency Theory, Audit committee characteristics, Institutional structure