The Audit Committee as Component of Corporate Governance: The Case of the Netherlands

The Audit Committee as Component of Corporate Governance: The Case of the Netherlands

Sana Masmoudi Mardessi (Ecole Supérieure de Commerce, Université de Sfax, Tunisia) and Yosra Makni Makni Fourati (Faculté des Sciences Economiques et de Gestion, Université de Sfax, Tunisia)
DOI: 10.4018/978-1-7998-4852-3.ch009
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Recently, numerous financial scandals (WorldCom, Enron, Parmalat, eToys) have shown that plentiful companies produce manipulated financial information. Consequently, regulators have prescribed corporate governance structures to protect investors and to avoid fraudulent financial reporting which are likely to control managers and limit their opportunistic behavior. Thus, there has been much debate over the extent to which corporate governance is playing a crucial role in increasing financial reporting quality from the theoretical perspective of agency theory, signaling theory, and stakeholder theory. This chapter aims at scrutinizing the internal and external mechanisms of corporate governance mainly the audit committee in the Dutch context. Firstly, the authors expose the numerous corporate governance mechanisms. Secondly, they focus on the audit committee as the main component of corporate governance, and they present the theoretical background, the role, and the characteristics of audit committee. Eventually, they exhibit the regulatory background of the Dutch context of the audit committee.
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1. Corporate Governance: Main Definitions And Mechanisms

Corporate Governance is a concept which improve management performance in monitoring or supervising the management performance while guaranteeing the management accountability for the shareholders based on regulatory framework (Dalimunthe et al., 2016; Lubis et al., 2016). The concept of Corporate Governance is projected for achieving more transparent company management for all financial statements’ users. If the concept is used properly, then the economic growth is expected to move forward in line with better transparent company management, which ultimately gives benefits to many parties.

In this section, we are going to define the main notions of corporate governance and mechanisms.

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