The role of the audit committee in Thailand: a mature monitoring mechanism or an evolving process?

• Published in: Journal of management and governance Vol. 13; no. 3; pp. 131 - 161
• Main Authors: Tengamnuay, Kwansagool, Stapleton, Pamela
• Format: Journal Article
• Language: English
• Published: Boston Springer US 01-08-2009; Springer Nature B.V
• Subjects: Accounting/Auditing; Audit committees; Auditing; Audits; Boards of directors; Business and Management; Committees; Communication channels; Corporate governance; Developing countries; Industrial Organization; Industrialized nations; Internal auditors; LDCs; Management; Monitoring; Perceptions; Questionnaires; Sociology; Stockholders; Studies; Thailand; Thailand; Evolutionary development; Thailand; Audit committees; Dominant shareholders; Developing country
• ISSN: 1385-3457; 1572-963X
• DOI: 10.1007/s10997-008-9067-4

Following the East Asia financial crisis of 1997 in common with other countries, Thailand mimicked a series of governance measures, including the mandatory formation of audit committees (AC), that were designed in western developed nations with diffuse share ownership, although evidence about the success of these measures in developed nations is mixed. This research contributes to understanding of the role of ACs in a non-English speaking developing country, where share ownership is concentrated, rather than diffuse. It examines the perceptions of audit committee members, investors and analysts about the roles ACs perform and the importance of these roles. To obtain a large number of responses we have used a questionnaire survey method. We adopt Spira’s (Corporate Governance: an International Review 6(1):29–38, 1998) model of evolutionary development of ACs in which they are characterised as developing along a continuum from an ‘infant’ to a ‘mature’ stage of development, although such development need not be linear. The majority of our participants report that ACs perform roles that are in line with international guidelines, but this appears to reflect a passive role in terms of complying with, rather than developing guidance and regulation. Our evidence reveals that the ACs placed greater emphasis on internal control systems, including internal audit and review of audit fees, than on roles associated with external audit and financial statements, indicative of an early stage in the process of evolutionary development.