Audit Committee Formation: The Case Of Poland

Purpose: This study investigates the determinants of audit committee (AC) formation in a semi-mandatory setting of a European economy, in which ownership and control are predominantly in the hands of families and business groups, and the voluntary practice of forming an AC has not been widely accepted.Methodology: This research uses a sample of Polish nonfinancial firms listed on the Warsaw Stock Exchange (WSE) in 2008-2015. The study implemented logistic regression to test the role of the supervisory board (SB) and companies' compositional characteristics in AC creation.Findings: Primary analysis provided evidence of an inverted association between commonly accepted determinants of AC formation - such as the number of independent members on the supervisory board (SB) - and accounting and finance expertise of the SB members. The study also revealed that companies with foreign ownership are more likely to have an AC.Originality: This study indicates an important relationship between the existence of other SB committees as a meaningful determinant of AC formation. This article is valuable for supervisory bodies and regulators as they provide insights into factors that influence audit committee formation.