Board of Director Composition and Audit Opinions

This paper empirically examines the relation between board of director composition and audit opinions using paired t- test, Wilcoxon matched-pair sign-rank test, and conditional logistic regression model. Based on a cross-sectional sample of 94 listed Chinese firms, the results indicate that there are no significant differences in proportion of independent directors and existence of audit committee between 47 firms with modified opinions and 47 firms with clean opinions. This results may imply that the role of independent directors and audit committee on monitoring the financial reporting process is not effective in listed Chinese firms. In addition, the results also indicate that firms with good performance are less likely to receive modified opinions than firms with bad performance.