The impact of audit committee features on firm performance – empirical evidence from GCC countries

• Autorzy: Al-Zaimoor Najeeba , Desoky Abdelmohsen , Al-Fadhel Hessa

Identyfikatory

DOI

10.17512/pjms.2024.29.2.04

Warianty tytułu

PL

Wpływ cech komitetu audytowego na wyniki przedsiębiorstwa – dowody empiryczne z krajów GCC

• Języki publikacji: EN

Abstrakty

EN

The main aim of this study is to explore the probable impact of audit committee (AC) features (AC size, AC independence, AC meetings, and AC financial expertise) on firm performance of listed firms in Gulf Cooperation Council (GCC) countries. This empirical investigation uses a sample of 281 listed firms in the six GCC countries representing 1124 firm-year observations for a period of four financial periods (2019-2022). Findings from both Hierarchical Multiple Regression models suggest that only two out of four independent variables (AC independence and AC financial expertise) explain the firm performance of listed firms in GCC countries. This study makes a valuable contribution to the existing literature by offering a comprehensive analysis of the influence of AC existence and its specific features on firm performance, drawing insights from agency theory and resource dependence theory. By examining these relationships, the study enhances our understanding of the mechanisms through which AC characteristics can impact a firm's success. The findings of this study hold practical implications for businesses and investors. By understanding the impact of AC characteristics on firm performance, businesses can make informed decisions when structuring their audit committees. They can prioritize specific features or attributes that have been found to positively influence firm performance, such as independence, expertise, and financial literacy of AC members. This knowledge can guide businesses in optimizing their governance structures and enhancing their overall performance. The results can be used as a guide by governments and other regulatory bodies for drafting rules pertaining to corporate governance (CG) codes, particularly those that deal with AC creation.

PL

Głównym celem tego badania jest zbadanie prawdopodobnego wpływu cech komitetu audytowego (wielkość komitetu audytowego, niezależność komitetu audytowego, spotkania komitetu audytowego oraz finansowa ekspertyza komitetu audytowego) na wyniki przedsiębiorstw notowanych na giełdzie w krajach Rady Współpracy Zatoki Perskiej (GCC). To empiryczne badanie wykorzystuje próbę 281 firm notowanych na giełdzie w sześciu krajach GCC, reprezentujących 1124 obserwacji w okresie czterech lat finansowych (2019-2022). Wyniki z modeli Hierarchicznej Wielokrotnej Regresji sugerują, że tylko dwie z czterech zmiennych niezależnych (niezależność komitetu audytowego oraz finansowa ekspertyza komitetu audytowego) wpływają na wyniki przedsiębiorstw notowanych na giełdzie w krajach GCC. To badanie wnosi cenny wkład do istniejącej literatury, oferując kompleksową analizę wpływu istnienia komitetu audytowego i jego specyficznych cech na wyniki przedsiębiorstw, czerpiąc wnioski z teorii agencji oraz teorii zależności zasobów. Analizując te zależności, badanie poszerza nasze zrozumienie mechanizmów, poprzez które cechy komitetu audytowego mogą wpływać na sukces firmy. Wyniki tego badania mają praktyczne implikacje dla przedsiębiorstw i inwestorów. Dzięki zrozumieniu wpływu cech komitetu audytowego na wyniki przedsiębiorstw, firmy mogą podejmować świadome decyzje przy tworzeniu swoich komitetów audytowych. Mogą priorytetowo traktować określone cechy lub atrybuty, które zostały uznane za pozytywnie wpływające na wyniki przedsiębiorstw, takie jak niezależność, ekspertyza i finansowa znajomość członków komitetu audytowego. Ta wiedza może pomóc firmom w optymalizacji ich struktur zarządzania i poprawie ogólnych wyników. Wyniki mogą być wykorzystane jako przewodnik przez rządy i inne organy regulacyjne przy opracowywaniu przepisów dotyczących kodeksów ładu korporacyjnego, szczególnie tych, które dotyczą tworzenia komitetów audytowych.

Słowa kluczowe

EN

audit committee features; firm performance; GCC countries

PL

cechy komitetu audytowego; wyniki przedsiębiorstwa; kraje GCC

• Wydawca: Czestochowa University of Technology
• Czasopismo: Polish Journal of Management Studies
• Rocznik: 2024
• Tom: Vol. 29, No. 2
• Strony: 66--86
• Opis fizyczny: Bibliogr. 50 poz., tab.

Twórcy

autor

Al-Zaimoor Najeeba

• College of Business Administration, University of Bahrain, Bahrain

• https://orcid.org/0000-0002-5839-0887

autor

Desoky Abdelmohsen

• College of Business Administration, University of Bahrain, Bahrain

• https://orcid.org/0000-0002-9714-438X

autor

Al-Fadhel Hessa

• College of Business Administration, University of Bahrain, Bahrain

• https://orcid.org/0000-0001-7912-1937

Bibliografia

• 1. Aanu, O. S., Iyoha, F. O. and Obigbemi, I. F., (2014). Effectiveness of audit committee and firm financial performance in Nigeria: an empirical analysis. Journal of Accounting and Auditing, 2014, a1-7.
• 2. Abbott, L. J., Parker, S. and Peters, G. F., (2004). Audit committee characteristics and restatements. Auditing: A Journal of Practice and Theory, 23(1), 69-87.
• 3. Agyemang-Mintah, P., Schadewitz, H., (2018). Audit committee adoption and firm value: evidence from UK financial institutions. International Journal of Accounting and Information Management, 26(1), 205-226.
• 4. Afza, T., Nazir, M. S., (2014). Audit quality and firm value: A case of Pakistan. Research Journal of Applied Sciences, Engineering and Technology, 7(9), 1803-1810.
• 5. Al Farooque, O., Buachoom, W. and Sun, L., (2020). Board, audit committee, ownership and financial performance - emerging trends from Thailand. Pacific Accounting Review, 32(1), 54-81.
• 6. Alqatamin, R. M., (2018). Audit Committee Effectiveness and Company Performance: Evidence from Jordan. Accounting and Finance Research, 7(2), 48.
• 7. Al-Matari, E. M., Al-Swidi, A. K. and Fadzil, F. H. B., (2014). Audit committee characteristics and executive committee characteristics and firm performance in Oman: Empirical study. Asian Social Science, 10(12), 98-113.
• 8. Almoneef, A., Samontaray, D. P., (2019). Corporate governance and firm performance in the Saudi banking industry. Banks and Bank Systems, 14(1), 147- 158.
• 9. Al-Jalahma, A., (2022). Impact of audit committee characteristics on firm performance: Evidence from Bahrain. Problems and Perspectives in Management, 20(1), 247-261.
• 10. Al-Okaily, J., Naueihed, S., (2020). Audit committee effectiveness and family firms: impact on performance. Management Decision, 58(6), 1021-1034.
• 11. Alzeban, A., Sawan, N., (2015). The impact of audit committee characteristics on the implementation of internal audit recommendations. Journal of International Accounting, Auditing and Taxation, 24, 61-71.
• 12. Amran, A., Lee, S. and Devi, S., (2014). The Influence of Governance Structure and Strategic Corporate Social Responsibility Toward Sustainability Reporting Quality, Business Strategy and the Environment, 23(4), 217-235.
• 13. Bansal, N., Sharma, A. K., (2016). Audit Committee, Corporate Governance and Firm Performance: Empirical Evidence from India. International Journal of Economics and Finance, 8(3), 103-116.
• 14. Ben Barka, H., Legendre, F., (2017). Effect of the board of directors and the audit committee on firm performance: a panel data analysis. Journal of Management and Governance, 21(3), 737-755.
• 15. Bolton, B., (2014). Audit committee performance: Ownership vs.independence – Did SOX get it wrong? Accounting and Finance, 54(1), 83-112.
• 16. Bhuiyan, M. B. U., D’Costa, M., (2020). Audit committee ownership and audit report lag: evidence from Australia. International Journal of Accounting and Information Management, 28(1), 96-125.
• 17. Budiharta, P., Kacaribu, H., (2020). The influence of board of directors, managerial ownership, and audit committee on carbon emission disclosure: a study of non-financial companies listed on BEI. Review of Integrative Business and Economics Research, 9, 75-87.
• 18. Chan, K. C., Li, J., (2008). Audit committee and firm value: evidence on outside top executives as expert‐independent directors. Corporate Governance: An International Review, 16(1), 16-31.
• 19. Carcello, J. V., Hollingsworth, C. W., Klein, A. and Neal, T. L., (2006). Audit Committee Financial Expertise. Competing Corporate Governance Mechanisms and Earnings Management.
• 20. Chou, T.-K., Buchdadi, A. D., (2017). Independent Board, Audit Committee, Risk Committee, the Meeting Attendance level and Its Impact on the Performance: A Study of Listed Banks in Indonesia. International Journal of Business Administration, 8(3), 24-36.
• 21. Dakhlallh, M., (2020). Audit Committee and Tobin's Q As A Measure of Firm Performance among Jordanian Companies. Journal of Advanced Research in Dynamical and Control Systems, 12(1), 28-41.
• 22. Dalton, D. R., Daily, C. M., Johnson, J. L. and Ellstrand, A. E., (1999). Number of directors and financial performance: A meta-analysis. Academy of Management Journal, 42(6), 674-686.
• 23. Desoky, A., Mousa, G., (2013). The impact of firm characteristics and corporate governance attributes on internet investor relations – evidence from Bahrain, International Journal of Business and Emerging Markets, 5(2), 119-147.
• 24. Garas, S., ElMassah, S., (2018). Corporate governance and corporate social responsibility disclosures. Critical perspectives on international business, 14(1), 2-26.
• 25. Hamdan, A. M., (2013). The Audit Committee Characteristics and Earnings Quality: Evidence from Jordan. Australasian Accounting Business and Finance Journal, 7(4), 52-80.
• 26. Heenetigala, K., Armstrong, A., (2011). The impact of corporate governance on firm performance in an unstable economic and political environment: Evidence from Sri Lanka. Conference on financial markets and corporate governance, 13, 1-17.
• 27. Herdjiono, I., Sari, I. M., (2017). The effect of corporate governance on the performance of a company. Some empirical findings from Indonesia. Journal of Management and Business Administration. Central Europe, 25(1), 33–52.
• 28. Hezabr, A., Qeshta, M., Al-Msni, F., Jawabreh, O. and Ali, B., (2023). Audit committee characteristics and firm performance: Evidence from the insurance sector in Oman. International Journal of Advanced and Applied Sciences, 10(5), 20-27.
• 29. Kallamu, B. S., Saat, N. A. M., (2015). Audit committee attributes and firm performance: evidence from Malaysian finance companies. Asian Review of Accounting, 23(3), 206-231.
• 30. Kamaludin, K. , Sundarasen, S. and Ibrahim, I., (2023). Moderation effects of multiple directorships on audit committee and firm performance: A middle eastern perspective. Cogent Business and Management, 10(1), 1-17.
• 31. Kaura, P., Dharwal, M., Kaur, H. and Kaur, P., (2019). Impact of corporate governance on financial performance of information technology companies. International Journal of Recent Technology and Engineering, 8(3), 7460-7464.
• 32. Jensen, M. C., Meckling, W. H., (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
• 33. Leung, S., Richardson, G. and Jaggi, B., (2014). Corporate board and board committee independence, firm performance, and family ownership concentration: An analysis based on Hong Kong firms. Journal of Contemporary Accounting and Economics, 10(1), 16-31.
• 34. Mohammed, A. M., (2018). The impact of audit committee characteristics on firm performance: Evidence from Jordan. Academy of Accounting and Financial Studies Journal, 22(5), 1-7.
• 35. Musová, Z., Musa, H., Rech, F. and Yan, Ch., (2023). Corporate governance principles adoption in the wake of the Covid-19 pandemic: The case of Slovakia. Journal of International Studies, 16(2), 222-241.
• 36. Nawafly, A. T. M., Alarussi, A. S. A., (2018). Board of directors, audit committee and the financial performance of listed companies in Malaysia. Journal of Social Sciences Research, 2018 (Special Issue 6), 951-957.
• 37. Nuhu, M. S., Umaru, S. Y. and Salisu, S., (2017). The effect of audit committee's quality on the financial performance of food and beverages industry in Nigeria. International Journal of Business and Management Invention, 6(9), 32- 40.
• 38. Oroud, Y., (2019). The Effect of Audit Committee Characteristics on the Profitability: Panel Data Evidence. International Journal of Economics and Finance, 11(4), 104-113.
• 39. Owiredu, A., Kwakye, M., (2020). The Effect of Corporate Governance on Financial Performance of Commercial Banks in Ghana. International Journal of Business and Social Science, 11(5), 18-27.
• 40. Persons, O. S., (2009). Audit committee characteristics and earlier voluntary ethics disclosure among fraud and no-fraud firms. International Journal of Disclosure and Governance, 6(4), 284-297.
• 41. Qeshta, M. H., Alsoud, G. F. A., Hezabr, A. A., Ali, B. J. and Oudat, M. S., (2021). Audit Committee Characteristics and Firm Performance: Evidence from the Insurance Sector in Bahrain. Revista Geintec-Gastao Inovacao E Tecnologias, 11(2), 1666-1680.
• 42. Omran, M., (2009). Post-privatization corporate governance and firm performance: the role of private ownership concentration, identity and board composition, Journal of Comparative Economics, 37(4), 658-673.
• 43. Rahman, M. M., Meah, M. R. and Chaudhory, N. U., (2019). The impact of audit characteristics on firm performance: an empirical study from an emerging economy. The Journal of Asian Finance, Economics and Business (JAFEB), 6(1), 59-69.
• 44. Sarpal, S., (2017). Analyzing Performance Implications of Selected Audit Committee Characteristics: A Study of Indian Corporate Sector. Business Perspectives and Research, 5(2), 137-150.
• 45. Tabachnick, B. G., Fidell, L. S., (2021). Using Multivariate Statistics, Seventh Edition, Pearson Education Inc., New Jersey.
• 46. Turley, S., Zaman, M., (2014). The Corporate Governance Effects of Audit Committee. In R. Di Pietra, S. McLeay, and J. Ronen (Eds.), Accounting and Regulation (pp. 133-159). Springer.
• 47. Vafeas, N., (1999). Board meeting frequency and firm performance. Journal of Financial Economics, 53(1), 113-142.
• 48. Wiseman, R. M., Cuevas-Rodríguez, G. and Gomez-Mejia, L. R., (2012). Towards a social theory of agency. Journal of Management Studies, 49(1), 202-222.
• 49. Yeh, Y. H., Chung, H. and Liu, C. L., (2011). Committee Independence and Financial Institution Performance during the 2007-08 Credit Crunch: Evidence from a Multi-country Study. Corporate Governance: An International Review, 19(5), 437-458.
• 50. Zraiq, M. A. A., Fadzil, F. H. B., (2018). The impact of audit committee characteristics on firm performance: Evidence from Jordan. Scholar Journal of Applied Sciences and Research, 1, 39-42.

Uwagi

Opracowanie rekordu ze środków MNiSW, umowa nr SONP/SP/546092/2022 w ramach programu "Społeczna odpowiedzialność nauki" - moduł: Popularyzacja nauki i promocja sportu (2024).