Audit Committee Attributes and Firm Performance

Abstract

"The audit committee provides considerable support when achieving corporate goals and objectives through practicing good governance in a firm. Although the audit committee is a critical element of corporate governance there is a dearth of studies relating to the audit committee. Thus, this research examined the impact of audit committee attributes on firm performance based on the Stewardship theory. The population for the study includes the listed companies in the Colombo Stock Exchange and the top 100 companies which have the highest market capitalization. The data collection study is an archival strategy based on the annual reports of the sample companies for the two years. The goals of this study are met with the help of EViews software and descriptive statistics and panel regression. The research findings of the study suggested that there is a positive relationship between Audit committee size, interlock of directors on the audit committee, and risk management committee with the firm's performance. The Interlock of directors on both the audit committee and nomination committee as well as the audit committee and remuneration committee have a negative relationship with the firm performance. Additionally, this study found that audit committee independence, financial expertise, audit committee diversification, and meeting frequency have no significant relationship with the firm performance. The findings of this study suggest that there should be audit committee compliance requirements that result in an increase in stewardship and improve performance which added new knowledge to Stakeholder theory."