Do Chief Audit Executives Matter? Evidence from Turnover Events
研究中国中小板上市公司首席审计执行官离职后内部审计监督效果的变化，发现离职后财务报告和内部控制质量下降，且继任者财务专长较低时下降更明显，对审计委员会和监管者具有参考价值。
SUMMARY We investigate the chief audit executive's (CAE) internal audit supervisory role by examining the change in internal audit monitoring effectiveness following the turnover of CAEs. Using a sample of firms listed on the small and medium enterprise board of China's stock exchange, we find that CAE turnover is accompanied by a reduction in financial reporting/internal control quality and that the reduction is more pronounced for firms whose successor CAEs have lower financial expertise than their predecessors. Further analysis shows that the negative association with financial reporting/internal control quality is stronger when the turnover is for personal reasons than when it is for internal transfer of the CAE. These findings are robust to a battery of sensitivity checks, including placebo tests and matching diagnostics. Our results highlight the importance of the CAE for a firm's internal audit functions. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G34; M42; M51.