Spotlight on the Design of European Audit Committees: A Comparative Descriptive Study

Abstract

In this study we shed light on the design of audit committees in continental Europe by analysing the contents of the Eighth EU Company Law Directive, European codes of governance, and corporate audit committee charters. Our results show substantial cross‐national differences in the scope of responsibilities to be addressed by audit committees, in the competences required of committee members, and the proportion of independent committee members. The extent of differentiation comes as a surprise in light of prevailing pressures for isomorphism in the design of audit committees. A closer analysis of publicly available audit committee charters shows that compulsory disclosure requirements can increase the effectiveness of coercive isomorphism, but, consistent with prior literature, can also increase the percentage of unoriginal content in corporate documents. Our results contribute to the scant knowledge about audit committees outside the Anglo‐Saxon domain and inform practice about implementing audit committee design standards in the EU.

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