Audit efficiency and board activity in Saudi Arabia: Empirical investigation

Khaled Salmen Aljaaidi,Omar Ali Bagais,Sultan Abdullah Alabdullatif

doi:10.5267/j.ac.2021.1.019

Khaled Salmen Aljaaidi, Omar Ali Bagais + Show 1 more

Open Access

https://doi.org/10.5267/j.ac.2021.1.019

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Abstract

The aim of this study is to empirically examine the association between audit efficiency and board activity among listed energy companies in Saudi Stock Exchange (Tadawul) for the period 2012-2019. The final sample of this study consists of 32 firm-year observations. Using the Pooled OLS regression, the study finds that audit efficiency was positively related to board activity. Moreover, the result indicates the complementary role of monitoring mechanisms in which audit efficiency complements the board activity. The study also provides insightful evidence to policy makers on the link of audit efficiency and board activity among energy companies.

Highlights

The focus of this study is to examine how audit efficiency may influence the activity of the board meeting frequency among energy listed companies in Saudi Arabia for the period 2012-2019
To the best of the researcher’s knowledge, no empirical evidence exists that allows conclusive determinations to be made of how the delay of audit report influences the board meeting frequency in the context of Saudi Arabia
This study is conducted in the setting of Saudi Arabia which is characterized as a context having a paucity of research

Summary

Introduction

The focus of this study is to examine how audit efficiency may influence the activity of the board meeting frequency among energy listed companies in Saudi Arabia for the period 2012-2019. The frequency of board meetings can be considered as a proxy for the time directors have to conduct their monitoring role as well as the level of activity delivery monitoring (Greco, 2010; Vafeas, 1999; Carcello et al, 2002; Laksmana, 2008). Companies wait for the issuance of the auditing report before pronouncing their earnings (Bamber et al, 1993) This means that it is incumbent upon the individual companies to promote timeliness provision of financial reports. To the best of the researcher’s knowledge, no empirical evidence exists that allows conclusive determinations to be made of how the delay of audit report influences the board meeting frequency in the context of Saudi Arabia. The sample of this study is the energy companies which is considered an important sector in the Saudi market that has been ignored as a sole industry in the empirical investigations

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