AN EXAMINATION OF THE RELATIONSHIP BETWEEN AUDIT COMMITTEE CHARACTERISTICS AND FIRM PERFORMANCE IN KUWAIT

Abstract

ABSTRACT The purpose of the current study is to extend prior audit research on the relation between the characteristics of firm’s Audit Committee (AC) and firm’s performance. In particular, this study performs a regression analysis using data from the Kuwaiti market, to examine the relation between firm’s AC characteristics (i.e., size, independence, and financial expertise) and firm’s performance. The empirical results reported reveal a significantly positive relation between firm’s performance and AC financial expertise as well as firm’s financial leverage. The study’s results, however, do not show evidence of a statistically significant impact of AC size, AC independence, or firm’s size on firm’s performance. The current study’s findings should be of value to audit researchers, stockholders, and market regulators. Keywords Audit committee, firm performance, auditing, Kuwait.