Hermalin and Weisbanch (1991) revealed that committees from outsiders or
independent audit committees would check on the management’s work more
efficiently than committees from within a company since the outsider committees had
to maintain their reputation. However, the ratio of outsider committees played a very
important role within the company. Additionally, Hossain, Prevost, and Rao (2001)
found that audit committee independence was significantly related to the company’s
performance.