Following the Asian financial crisis, many emerging economies have attempted to improve corporate
governance to protect shareholder wealth, since poor governance has been regarded as one of the
main reasons for the massive decline in shareholder value during the crisis (Johnson et al., 2000;
Mitton, 2002; Lemmon and Lins, 2003; Baek et al., 2004; Nam and Nam, 2004). Many Asian governments
have made efforts to reform their corporate governance by introducing a number of governance
devices from developed economies. The audit committee is one of these key governance devices.