Audit committee characteristics, political influence and internal control quality in China

This study examines the association between internal control quality and the two unique audit committee (AC) characteristics in Chinese listed firms: politically connected members and academic members on audit committees. This study finds that internal control quality is positively and significantly associated with political connection and percentage of academic directors on audit committees. In fact, the influence of political connected audit committee members on internal control quality is found to be significant in all five aspects of internal control. This study also finds that a high quality internal control can lead to better earnings quality.