The expansion of the scope of private ownership through privatization of state-owned enterprises and decentralization has brought into focus the capital owners’ interests in strengthening the culture of accountability and in promoting information transparency of companies and other economic units in which all or a part of the capital is supplied by the public. This aim requires mechanisms to ensure proper governance in companies and other economic firms. Among the elements of corporate governance, audit committee is the key element that strengthens the health of financial reporting. The present study attempts to examine the factors affecting the quality of the audit committee. The sample for the study includes financial managers or board members of 185 listed companies in the Tehran Stock Exchange. Research results indicate that enhancement in independency, expertise and activities of non-executive members of the board increases the independency, expertise and activities of the audit committee, and also, there is a meaningful relationship between the size of the board of non-executive members and the size of the audit committee.

Keywords