Audit Committee Attributes and Financial Performance: Evidence from Selected Deposit Money Banks in Nigeria
Keywords:
Audit Committee Size, Audit Committee Gender Diversity, Audit Committee Meeting, Financial Performance
Abstract
This study examined the effect of Audit Committee Attributes on Financial Performance listed deposit money banks in Nigeria. Audit committee size, gender diversity and audit committee meeting were proxy for audit committee attributes while financial performance was measured with return on asset. Ex-post facto research design was adopted and secondary data were collected from annual reports and accounts of selected deposit money banks covering ten years from 2014 to 2023. The population of the study comprised of the 15 deposit money banks listed on Nigerian Exchange Group (NGX) as at 31st December, 2023. The study purposively selected ten (10) banks based on the availability of their annual reports. The data collected were analyzed using descriptive statistics, and multiple regressions. The findings revealed that audit committee size has a negative and insignificant effect on return on asset, gender diversity has positive and significant effect on firm performance measured with return on asset, while audit committee meeting exhibit negative and significant effect on return on asset of selected listed deposit money banks. Based on the findings, this study therefore recommended that firm should sustain frequencies of audit committee meetings, so as to ensure that the committee has enough time to take decisions that will enhance financial performance.
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References
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Rateb M. A. (2018). Audit committee effectiveness and company performance: Evidence from Jordan. Accounting and Finance Research, 7(2), 48-60.
Sujatha, N., Muninarayanappa, M. & Sathyanarayana. (2017). Role of audit committee and its impact on firm performance in India, International Journal of Development Research, 7, (10), 15862-15865.
Shamsuddin, A. B., & Alshahri, G. M. (2022). The Effect of Audit Committee Characteristics on Firm Performance: Evidence from Non-Financial Sectors in Oman. Asian Economic and Financial Review, 12(9), 816-836.
Umobong, O. S., & Ibanichuka, O. I. (2017). Effectiveness of audit committee and firm financial performance in Nigeria: an empirical analysis. Journal of Accounting and Auditing: Research and Practice, 2(14), 1-12.
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.
Al-Jalahma, A. (2022). Impact of audit committee characteristics on firm performance: Evidence from Bahrain. Management, 20(1), 247-261.
Amahalu, N.N. (2020). Effect of auditors’ rotation on audit quality of quoted deposit money banks in Nigeria. Faculty of Management Sciences, 2019 International Conference Proceedings, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria, 467-479.
Asiriuwa, O., Aronmwan, E. J., Uwuigbe, U., & Uwuigbe, O. R. (2018). Audit committee attributes and audit quality: A benchmark analysis. Verslas: Teorija IR Praktika/Business: Theory and Practice, 19, 37-48.
Babatunde, S. A., Ikubor, O. J., & Udobi-Owoloja, P. I. (2022). Audit Committee and Firms Performance in Nigeria. NDA Journal of Management Sciences Research 2(1), 114-123.
Bansal, N., & A. K. Sharma. (2016). Audit committee, corporate governance and firm performance: empirical evidence from India. International Journal of Economics and Finance, 8(3), 103.
Bouaine, W., & Hrichi, Y. (2019). Impact of audit committee adoption and its characteristics on financial performance: evidence from 100 French companies. Accounting and Finance Research, 8(1), 92-102.
Chukwu, G. J., & Nwabochi, N. (2019). Audit committee characteristics and timeliness of corporate financial reporting in the Nigerian insurance industry. International Journal of Managerial Studies and Research, 7(4), 86-95.
Chung, W.N., Ho, B. and Kim, W. (2004). Market reaction to voluntary announcements of audit committee appointments: the effect of financial expertise. Journal of Accounting & Public Policy, 23(4), 279-293.
Contessotto, C., & R. Moroney. (2014). The association between audit committee effectiveness and audit risk. Accounting & Finance, 54(2), 393-418.
Dakhlallh, M. M., Rashid, N., 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 Advance Research in Dynamical & Control Systems, 12(1). 28-41.
Dissanayake, W.G.P.K., and Bandara, R.M.S., (2018). Impact of Audit Committee Characteristics on Financial Performance of Listed Finance Companies in Sri Lanka. International Conference for Accounting Researchers and Educators.
Donaldson, L., & Davis, J. H. (1991). Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of management, 16(1), 49-64.
Emeka-Nwokeji, N. A., & Agubata, S. N., (2019). Board attributes and corporate performance: Evidence from nonfinancial firms in Nigeria. The Asian Institute of Research Journal of Economics and Business, 2(2), 205-217.
Eseoghene, O., & Oghenevwogaga, O. (2021). Does Audit Committee Characteristics Drive Financial Performance? A Case of Nigerian Service Firms. Gusau International Journal of Management and Social Sciences, 4(1), 13-13.
Herdjiono, K., & Sari, M. (2017). The impact of corporate governance on future-oriented disclosures: a large-scale UK study (Working Paper). Stirling University.
Ibida, N. J. F., & Emeka-Nwokeji, N. A. (2019). Effect of corporate social responsibility (CSR) on financial performance of oil and gas companies in Nigeria. Journal of Accounting, Business and Social Sciences, 2(1), 56-73.
Ibrahim, H. B., Ouma, C., & Koshal, J. O. (2019). Effect of audit committee independence on the financial performance of insurance firms in Kenya. International Journal of Research in Business and Social Science (2147-4478), 8(6), 15-24.
Ida G. & Asunka B. A. (2016). The effect of audit committees on the performance of firms listed on the Ghana stock exchange. IOSR Journal of Business and Management (IOSR-JBM), 18(11), 55-62.
Jensen, M. and Meckling, W. (1976), “Theory of the firm: managerial behavior, agency-costs and ownership structure”, Journal of Financial Economics, 3(4), 305-360.
Kallamu, B. S., & N. A. M. Saat. (2015). Audit committee attributes and firm performance: Evidence from Malaysian finance companies. Asian Review of Accounting, 23(3), 206- 231.
Mnnubia, I. O., & Kornom-Gbaraba, K. T. (2018). Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics, 33(3), 375-400.
Mohiuddin, M., & Karbhari, Y. (2010). Audit committee effectiveness: A critical literature review. AIUB Journal of Business and Economics, 9(1), 97-125.
Narwal, K. P., & Jindal, S. (2015). The impact of corporate governance on the profitability: An empirical study of Indian textile industry. International Journal of Research in Management, Science & Technology, 3(2), 81-85.
Nnubia, I. C. (2015). Audit Committees Attributes and Effectiveness of Corporate Governance in Nigeria. Journal of Banking and Financial Studies, 1(1); 79-86
Nnubia, I. C. and Kornom-Gbaraba, M. (2018). Effect of Capital Structure on Firm Performance of Quoted Companies in Nigeria. ANSU Journal of Public Administration (ANSUJOPA), 2(1), 188-208.
Ojeka, S., Iyoha, F., & Asaolu, T. (2015). Audit committee financial expertise: Antidote for financial reporting quality in Nigeria. Mediterranean Journal of Social Sciences, 6(1), 136-146.
Okaro, S. C., & Okafor, G. O. (2013). Drivers of audit failure in Nigeria- Evidence from Cadbury. Research Journal of Finance and Accounting, 4(6), 14–17.
Okeke, P. C. (2021). Audit Committee Attributes and Corporate Performance: Evidence from Selected Manufacturing Firms in Nigeria. European Journal of Accounting, Auditing and Finance Research, 9(9), 1-17.
Olayinka, O. M. (2019). Audit Committee and Firms Performance in Nigeria: Case Study of selected Nigerian Banks. International Journal of Scientific and Research Publications, 9(9), 315-323.
Orjinta, H. I. & Ikueze N. E. (2018). Effect of audit committee characteristics on performance of non-financial firms: Evidence from a recessed economy. International Journal of Innovation and Studies, 24(1). 289-298.
Osevwe-Okoroyibo, E. E. and Emeka-Nwokeji, N. A (2021). Examining effect of audit committee attributes on firm performance: evidence from listed food and beverages firms in Nigeria. European Journal of Accounting, Auditing and Finance Research, 9(8), 26-43.
Qeshta, M. H., Alsoud, G. F. A., Hezabr, A. A., Ali, B. J., & Oudat, M. S. (2021). Audit committee characteristics and firm performance: Evidence from the insurance Sector in Bahrain. Revista Geintec-Gestao Inovacao E Tecnologias, 11(2), 1666-1680.
Rateb M. A. (2018). Audit committee effectiveness and company performance: Evidence from Jordan. Accounting and Finance Research, 7(2), 48-60.
Sujatha, N., Muninarayanappa, M. & Sathyanarayana. (2017). Role of audit committee and its impact on firm performance in India, International Journal of Development Research, 7, (10), 15862-15865.
Shamsuddin, A. B., & Alshahri, G. M. (2022). The Effect of Audit Committee Characteristics on Firm Performance: Evidence from Non-Financial Sectors in Oman. Asian Economic and Financial Review, 12(9), 816-836.
Umobong, O. S., & Ibanichuka, O. I. (2017). Effectiveness of audit committee and firm financial performance in Nigeria: an empirical analysis. Journal of Accounting and Auditing: Research and Practice, 2(14), 1-12.
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.
Published
2024-07-02
How to Cite
E. Agada, A., & Lazarus, M. S. (2024). Audit Committee Attributes and Financial Performance: Evidence from Selected Deposit Money Banks in Nigeria. GPH-International Journal of Business Management, 7(05), 82-96. https://doi.org/10.5281/zenodo.12621155
Section
Articles
Copyright (c) 2024 Aloysius E. Agada & Mary S. Lazarus
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