FACTORS INFLUENCING AUDIT COMMITTEE MEETING FREQUENCY IN INDONESIA LISTED FIRMS

Abstract

This study aims to examine factors influencing the frequency of audit committee meetings. Frequency of meetings reflects the activities of the audit committee which are often used as a measure of its effectiveness. This study uses ownership concentration, insider ownership, board size, and the proportion of independent commissioners as variables expected to affect the frequency of audit committee meetings. This study is based on research by Greco (2011) with some modifications to accomodate Indonesian context. Population of this study is non–financial companies listed in Indonesia Stock Exchange (IDX) 2013. Sampling technique used is random sampling. A total sample of 85 companies is used for analysis. Data are analyzed using multiple regression analysis. The results of this study indicate that insider ownership has a negative effect on audit committee meeting frequency whereas proportion of independent commissioner has a positive effect on audit committee meeting frequency. However, this study does not find negative effects of the ownership concentration and board size on the frequency of audit committee meetings. Findings support the view that large insider shareholder has substitute effect for monitoring activity by audit committee. Moreover stronger representation of independent commissioner is an effective governance mechanism in a setting featured by large controlling shareholders by its significant role influencing audit committee activities.