Financially literate audit committees boost stock price, study says.

• Position: Brief Article

Audit committee members with knowledge of accounting issues and their related business ramifications translates into a higher stock price, according to a recent study by a University of Chicago researcher. Accountants, controllers or other executives with clear accounting experience were deemed the most financially literate for the research, which involved reviewing biographies and assessing the financial literacy of audit committee members of the largest 300 public companies. From the beginning of 2000 to the end of 2003, the prices of shares of companies that increased their audit committee financial literacy ranking...