| The audit committee serves a very significant role in corporate governance. However, the effectiveness of the audit committee has been questioned due to the recent corporate scandals. Therefore, in order to enhance the effectiveness of the audit committee, the Sarbanes-Oxley Act of 2002 has entrusted the committee with significant responsibilities. Traditionally, the effectiveness of the audit committee has been measured through the dimensions of independence, financial expertise and diligence. However, anecdotal evidence shows that audit committee members with these mandated characteristics of effectiveness still fail. Therefore, as some researchers have pointed out, a behavioral study is necessary. Thus, this study incorporated two behavioral theories, escalation of commitment and groupthink, to examine the decision quality of audit committee members. Results show that audit committee members with a responsibility for a task are less likely to follow group consensus. Interestingly, the results also demonstrate that audit committee members who are not responsible for hiring the audit firm are more likely to exhibit higher dissatisfaction level with a Big 4 firm than with a regional one. Hence, the study contributes to audit committee research by capturing the interaction between two behavioral patterns. |
