Journal Screenshot

International Journal of Academic Research in Accounting, Finance and Management Sciences

Open Access Journal

ISSN: 2225-8329

The Effect of Audit Committee Attributes on Nigerian Listed Companies’ Firm Performance

Norfadzilah Rashid, Mustapha Jamiu, Auwal Garba

http://dx.doi.org/10.6007/IJARAFMS/v14-i2/21055

Open access

This research examined the effect of audit committee attributes on the performance of Nigerian-listed firms. A sample of 88 listed firms with 880 observations was utilised from 2012 to 2021. This study analysed data obtained from secondary sources utilizing the Generalized Method of Moments (GMM). The findings discovered a significant positive correlation between audit committee chair, audit committee tenure, audit committee female member, and firm performance of Nigerian listed companies. However, the result indicates that audit committee share ownership does not influence firm performance. These findings provide evidence for Nigerian regulators, investors, and executives to consider when developing corporate policies. Therefore, executives and stakeholders may benefit from the empirical data provided by this study. The study suggests controlling members who possess significant shareholdings in the audit committee. In turn, this may improve the performance of the firm by increasing investors' propensity to safeguard their capital and facilitate more thorough monitoring and overseeing of the financial reporting process.

Abad, D., Lucas-Pérez, M. E., Minguez-Vera, A., & Yagüe, J. (2017). Does gender diversity on corporate boards reduce information asymmetry in equity markets? BRQ Business Research Quarterly, 20(3), 192–205. https://doi.org/10.1016/j.brq.2017.04.001
Abeygunasekera, A. W. J. C., Weerasuriya, R. M. I. H., & Kehelwalatenna, S. (2021). Effect of Attributes of Audit Committee on Financial Performance: The Case of Sri Lanka. Global Review of Accounting and Finance, 12(1), 43–57.
Agyemang, J. K. (2020). The Relationship Between Audit Committee Characteristics and Financial Performance of Listed Banks in Ghana. Research Journal of Finance and Accounting, 11(10), 22–35. https://doi.org/10.7176/RJFA/11-10-03
Al Farooque, O., Buachoom, W., & Sun, L. (2019). Board, audit committee, ownership and financial performance – emerging trends from Thailand. Pacific Accounting Review, 32(1), 54–81. https://doi.org/10.1108/PAR-10-2018-0079
Albawwat, I. E., & Alharasees, M. N. A. (2019). Gender Attributes of Audit Committee Members and the Quality of Financial Reports. International Journal of Academic Research in Accounting, Finance and Management Sciences, 9(3), Pages 24-37. https://doi.org/10.6007/IJARAFMS/v9-i3/6323
Aldamen, H., Hollindale, J., & Ziegelmayer, J. L. (2018). Female audit committee members and their influence on audit fees. Accounting & Finance, 58(1), 57–89. https://doi.org/10.1111/acfi.12248
Ali, B., & Kamardin, H. (2018). Audit Committee Characteristics and Real Earnings Management: A Review of Existing Literature and the New Avenue of Research. Asian Journal of Multidisciplinary Studies, 6(12), 128–135.
Al-Matari, Y. A., Al-Swidi, A. K., Fadzil, F. H. B., & Al-Matari, E. M. (2012). Board of Directors, Audit Committee Characteristics and Performance of Saudi Arabia Listed Companies. International Review of Management and Marketing, 2(4), 241–251.
Alodat, A. Y., Al Amosh, H., Khatib, S. F. A., & Mansour, M. (2023). Audit committee chair effectiveness and firm performance: The mediating role of sustainability disclosure. Cogent Business & Management, 10(1), 2181156. https://doi.org/10.1080/23311975.2023.2181156
Alqatamin, R. M. (2018). Audit Committee Effectiveness and Company Performance: Evidence from Jordan. Accounting and Finance Research, 7(2), 48–60. https://doi.org/10.5430/afr.v7n2p48
Bagais, O. A., & Aljaaidi, K. S. (2020). Corporate governance attributes and firm performance in Saudi Arabia. Accounting, 923–930. https://doi.org/10.5267/j.ac.2020.8.005
Bala, H. (2018). Audit Committee Characteristics and Financial Reporting Quality in Nigeria: The Mediating Effect of Audit Quality [PhD]. Universiti Utara Malaysia.
Bala, H., Amran, N. A., & Shaari, H. (2018). The Relationship between Audit Committee Attributes and Audit Fees of Listed Companies in Nigeria. The Journal of Social Sciences Research, 6, 402–408. https://doi.org/10.32861/jssr.spi6.402.408
Bala, H., Amran, N. A., & Shaari, H. (2019). Audit committee attributes and cosmetic accounting in Nigeria: The moderating effect of audit price. Managerial Auditing Journal, 35(2), 177–206. https://doi.org/10.1108/MAJ-06-2018-1897
Bédard, J., Chtourou, S. M., & Courteau, L. (2004). The effect of audit committee expertise, independence, and activity on aggressive earnings management. A Journal of Practice & Theory, 23(2), 13–25.
Berle, A., & Means, G. (1932). The Modern Corporation and Private Property. Macmillan.
Bolton, B. (2014). Audit Committee Performance: Ownership vs. Independence—Did SOX get it wrong? Accounting and Finance, 54(1), 83–112.
Bonazzi, L., & Islam, S. M. N. (2007). Agency theory and corporate governance: A study of the effectiveness of board in their monitoring of the CEO. Journal of Modelling in Management, 2(1), 7–23. https://doi.org/10.1108/17465660710733022
Carcello, J. V., & Neal, T. L. (2003). Audit Committee Characteristics and Auditor Dismissals following “New” Going-Concern Reports. The Accounting Review, 78(1), 95–117. https://doi.org/10.2308/accr.2003.78.1.95
Chaudhry, N. I., Roomi, M. A., & Aftab, I. (2020). Impact of expertise of audit committee chair and nomination committee chair on financial performance of firm. Corporate Governance: The International Journal of Business in Society, 20(4), 621–638. https://doi.org/10.1108/CG-01-2020-0017
Chiru, M., & Gherghina, S. (2019). Committee chair selection under high informational and organizational constraints. Party Politics, 25(4), 547–558. https://doi.org/10.1177/1354068817741765
Dakhlallh, M. M., Rashid, N. M. N. M., Abdullah, W. A. W., & Al Shehab, H. J. (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. https://doi.org/10.5373/JARDCS/V12I1/20201005
Edem, I., Chukwu, U. C., & Ekpe, E. B. (2022). Relationships between Auditor Quality, Audit Committee Tenure and Financial Reporting Quality of Listed Firms in Nigeria. European Journal of Marketing and Management Sciences, 5(03), 1–23.
Fiardhani, A. (2022). THE EFFECT OF AUDIT COMMITTEE CHARACTERISTICS AND WOMEN ON BOARD ON FIRM PERFORMANCE: AN ANALYSIS OF INDONESIAN MANUFACTURING FIRMS. International Journal of Economics, Business and Accounting Research, 6(4), 2221–2233.
Ghafran, C., & Yasmin, S. (2018). Audit committee chair and financial reporting timeliness: A focus on financial, experiential and monitoring expertise. International Journal of Auditing, 22(1), 13–24. https://doi.org/10.1111/ijau.12101
Hermalin, B. E., & Weisbach, M. S. (1991). The Effects of Board Composition and Direct Incentives on Firm Performance. Financial Management, 20(4), 101. https://doi.org/10.2307/3665716
Hillman, A. J., & Dalziel, T. (2003). Boards of Directors and Firm Performance: Integrating Agency and Resource Dependence Perspectives. Academy of Management Review, 28(3), 383–396.
Huse, M. (2005). Accountability and Creating Accountability: A Framework for Exploring Behavioural Perspectives of Corporate Governance. British Journal of Management, 16, 65–79.
Ibanichuka, E. A. L., & Ihendinihu, J. U. (2012). Creative Accounting and Implication for Dividend Payout of Companies in the Financial Sub-Sector of Nigerian Economy. Mediterranean Journal of Social Sciences, 3, 15.
Issa, G., & Siam, Y. A. (2020). Audit Committee Characteristics, Family Ownership, and Firm Performance: Evidence from Jordan. International Journal of Innovation, 14(4), 15.
Itan, I., & Chelencia, V. (2022). The Mediating Role Of Capital Structure In Corporate Governance On Firm Performance Of Family Companies. Jurnal Ecodemica?: Jurnal Ekonomi Manajemen Dan Bisnis, 6(2), 306–318. https://doi.org/10.31294/eco.v6i2.13027
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.
Koutoupis, A. G., & Bekiaris, M. (2019). Audit Committees Impact on Company Performance: The Greek & Italian Experience. International Journal of Auditing and Accounting Studies, 1(1), 1–12., 1(1), 1–12.
Li, J., Mangena, M., & Pike, R. (2012). The effect of audit committee characteristics on intellectual capital disclosure. The British Accounting Review, 44(2), 98–110. https://doi.org/10.1016/j.bar.2012.03.003
Lückerath-Rovers, M. (2013). Women on boards and firm performance. Journal of Management & Governance, 17(2), 491–509. https://doi.org/10.1007/s10997-011-9186-1
Mwangi, A. K., Oluoch, J. O., Muturi, W., & Florence, M. (2017). Effect of Audit Committee Diversity on Quality of Financial Reporting in Non-Commercial State Corporations in Kenya. International Journal of Academic Research in Business and Social Sciences, 7(6), Pages 288-302. https://doi.org/10.6007/IJARBSS/v7-i6/2963
Obigbemi, I. F., Omolehinwa, E. O., & Mukoro, D. O. (2017). Ownership Structure and Earnings Management Practices of Nigerian Companies. Journal of Internet Banking and Commerce, 22(S8), 1–8.
Omotoye, O., Aderemi Adeyemo, K., Omotoye, T., Okeme, F., & Leigh, A. (2021). Audit committee attributes, board attributes and market performance of listed deposit money banks in Nigeria. Banks and Bank Systems, 16(1), 168–181. https://doi.org/10.21511/bbs.16(1).2021.15
Onyabe, J. M., Okpanachi, J., Nyor, T., Yahaya, O. A., & Ahmed, M. (2018). Effect of Audit Committee Tenure on Financial Reporting Quality of Listed Deposit Money Banks in Nigeria. European Scientific Journal, 14(4), 257–271. https://doi.org/10.19044/esj.2018.v14n4p257
Orjinta, H. I., & Evelyn, I. N. (2018). Effect of Audit Committee Characteristics on Performance of Non-Financial Firms: Evidence from A Recessed Economy. 24(1), 10.
Osemene, O. F., & Fakile, O. G. (2018). Effectiveness of Audit Committee and Financial Performance of Deposit Money Banks In Nigeria. Fountain University Osogbo Journal of Management, 3(3), 23–34.
Özer, G., & Merter, A. K. (2023). Audit Committee Financial Expertise, Tenure, and Capital Structure Decisions, Evidence from Turkey. In N. Özataç, K. K. Gökmeno?lu, D. Balsalobre Lorente, N. Ta?p?nar, & B. Rustamov (Eds.), Global Economic Challenges (pp. 55–66). Springer International Publishing. https://doi.org/10.1007/978-3-031-23416-3_5
Pozzoli, M., Pagani, A., & Paolone, F. (2022). The impact of audit committee characteristics on ESG performance in the European Union member states: Empirical evidence before and during the COVID-19 pandemic. Journal of Cleaner Production, 371, 133411. https://doi.org/10.1016/j.jclepro.2022.133411
Puwanenthiren, P. (2020). Do Audit Committee Attributes Affect Firm Performance of Sri Lankan Firms? Management & Accounting Review, 19(2), 118–130.
Shrestha, N. (2020). Detecting Multicollinearity in Regression Analysis. American Journal of Applied Mathematics and Statistics, 8(2), 39–42. https://doi.org/10.12691/ajams-8-2-1
Susanto, Y. K. (2016). The Effect of Audit Committees and Corporate Governance on Earnings Management: Evidence from Indonesia Manufacturing Industry. International Journal of Business, Economics and Law, 10(1), 32–37.
Usman, A. B., Amran, N. A., & Shaari, H. (2020). The Effect Of Corporate Governance Mechanisms On The Valuation Of Comprehensive Income Reporting In Nigeria. Malaysian Management Journal. https://doi.org/10.32890/mmj.21.2017.9048
Wan-Hussin, W. N., Fitri, H., & Salim, B. (2021). Audit committee chair overlap, chair expertise, and internal auditing practices: Evidence from Malaysia. Journal of International Accounting, Auditing and Taxation, 44, 1–18. https://doi.org/10.1016/j.intaccaudtax.2021.100413
Zabri, S. M., Ahmad, K., & Wah, K. K. (2016). Corporate Governance Practices and Firm Performance: Evidence from Top 100 Public Listed Companies in Malaysia. Procedia Economics and Finance, 35, 287–296. https://doi.org/10.1016/S2212-5671(16)00036-8
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(5), 39–42.

(Rashid et al., 2024)
Rashid, N., Jamiu, M., & Garba, A. (2024). The Effect of Audit Committee Attributes on Nigerian Listed Companies’ Firm Performance. International Journal of Academic Research in Accounting Finance and Management Sciences, 14(2), 247–259.