Abstract
The audit committee effectiveness (ACE) has been researched for several times by academics in accounting and finance literature in terms of relationships with earnings management, corporate governance mechanism, power types and, audit fee etc. This study aims to measure of the emphasize of effective audit committees (ACs) on bank performance via using some of the main bank performance indicators which are return on asset (ROA), return on equity (ROE) and net interest margin (NIM) in the Turkish and the UK banks during 2006-2010.
Highlights
In this study we aim to associate the characteristics of audit committee effectiveness (ACE) (number of members in audit committee (AC), number of independent members in audit committees (ACs), number of Audit Committee (AC) meetings, financial expertise of members in AC, education level of members in AC, age, gender diversity and experience of members in AC with bank performance in the means of bank measure ratios (ROA, Return on Equity (ROE) and Net Interest Margin (NIM)) in the Turkish and UK banks during 2006-2010.With high-profile financial fraud cases in early of this decade, academic and industry search for effective AC’s to provide sound monitoring (Chan and Li, 2008)
In order to understand the connection between the AC characteristics and bank performance indicators we have developed those three hypotheses: H1: Characteristics of Audit committee effectiveness is associated with return on asset
We are going to assess the results of regression analysis which try to connect the dependent variables, Return on Assets (ROA), ROE and NIM with the AC characteristics which we set as independent variables
Summary
With high-profile financial fraud cases in early of this decade, academic and industry search for effective AC’s to provide sound monitoring (Chan and Li, 2008). ACE is very important for sound Corporate Governance practices in the organization (Campbell, 1990) and lack of effective Audit practice is a reason behind rigorous financial problems of companies (Vicknair et al, 1993). Turkey has relatively a short history on corporate governance especially concerning the concept of AC practices. UK has a relatively long experience on AC practices and it starts from Cadbury Report in 1992. It should give UK a reasonable chance to stand to financial crises. The financial crises that emerged in the late 2000s in UK have affected deeply UK banking sector more than Turkey’s banking sector
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