Audit Committee Characteristics and Executive Committee Characteristics and Firm Performance in Oman: Empirical Study

Ebrahim Mohammed Al Matari,Abdullah Kaid Al Swidi,Faudziah Hanim Bt Fadzil

doi:10.5539/ass.v10n12p98

Abstract

This study attempted to examine the association between two important committees of corporate governance practice namely, audit committee characteristics and executive committee characteristics, and firm performance. The data used comprised of non-financial companies listed in Muscat Security Market (MSM) through 2011 and 2012. Based on widely existing literature that studied the relationship between corporate governance and firm performance, studies that investigated the role of executive committee with firm performance are few and far between and hence, the main aim of this study is to discover this relation. Therefore, this study is an attempt to fill the gap in literature by exploring these new measures and contributing to a rich body of existing literature.The outcome of this study revealed a positive relationship between audit committee size (ACSIZE), audit committee independence (ACINDE) and executive committee size (ECSIZE) and firm performance but not significant. In addition, the association between audit committee meeting (ACMEETIN), executive committee independence (ECINDE) and executive committee meeting (ECMEETIN) and firm performance was negative but not significant. The findings found the relationship between firm size (FIRMSIZE) and firm performance to be positively significant while the relationship between leverage (LEVERAG) and firm performance was found to be negatively significant. Finally, this study discusses the results and provides limitation and recommendations towards the end.

Highlights

With the advent of the Asian financial crisis in 1997 and 1998 and the recent crisis involving Enron, WorldCom, Ahold among others, in Europe and America, confidence on corporate institutions and legislative bodies & agencies is all-time low
Based on widely existing literature that studied the relationship between corporate governance and firm performance, studies that investigated the role of executive committee with firm performance are few and far between and the main aim of this study is to discover this relation
The outcome of this study revealed a positive relationship between audit committee size (ACSIZE), audit committee independence (ACINDE) and executive committee size (ECSIZE) and firm performance but not significant

Summary

Introduction

With the advent of the Asian financial crisis in 1997 and 1998 and the recent crisis involving Enron, WorldCom, Ahold among others, in Europe and America, confidence on corporate institutions and legislative bodies & agencies is all-time low These problems were highlighted during the crisis including the operations and transactions in-house, staff, relatives and friends involved in businesses and government and companies receiving a significant amount of short-term debts without the knowledge of shareholders. The issue of corporate governance has become one of the most widespread and common themes in the business environment and investment in gulf countries It has gained governance importance as a result of the following factors; enormous developments, its importance in the practice of the departments of companies, its significance in dealing with shareholders and the manner and method of preserving the rights of shareholders, and various financial collapses and administrative major international companies, and the prevalence of financial and www.ccsenet.org/ass

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Conclusion