How the source of an audit committee's financial expertise influences financial reporting timeliness

What is it about?

We investigate the association between audit committee (AC) members' financial expertise and financial reporting timeliness We find that AC accounting financial expertise is associated with timelier accounting information. Importantly, we find accounting expertise gained from public accounting experience is associated with timelier financial reporting; however, accounting expertise gained from CFO experience is not. We also find that AC chairs (ACCs) with accounting expertise from public accounting experience are significantly associated with timelier financial reporting while ACCs with CFO-sourced accounting expertise are not.

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Why is it important?

Our results suggest that AC accounting financial expertise contributes to AC effectiveness by improving the timeliness of financial information. Our findings also highlight how personal characteristics of accounting financial experts influence contributions toward AC effectiveness.