Table 2 presents descriptive statistics, by audit report type, for each of the study’s independent variables. Since we later split the percentage of affiliated directors on the audit committee into two components (the percentage of inside directors and the percentage of gray directors), Table 2 also includes descriptive statistics on the percentage of inside directors and gray directors on the audit committee. Inside directors are current officers or employees of the company or of a related entity. Gray directors include former officers or employees of the company or of a related entity, relatives of management, professional advisors to the company (e.g., consultants, bank officers, legal counsel), officers of significant suppliers or customers of the company, and interlocking directors