DO AUDIT COMMITTEE ATTRIBUTES AFFECT FIRM PERFORMANCE OF SRI LANKAN FIRMS

Abstract

This paper aims to examine the association between audit committee attributes and firm performance in Sri Lanka. The study analyse the sample of 100 Sri Lankan firms for the period 2014-2018. Regression analysis is used to estimate the relationship between audit committee attributes and firm performance. The results reveal that the audit committee attributes of firms, namely audit committee size, audit committee independence and audit committee financial expertise are significantly correlated to firm performance while there is no significant impact of audit committee size on Tobin’s Q. An exception exists with audit committee meetings where it had an insignificant effect on ROA and Tobin’s Q. Finally, the results suggest that the more active (i.e., more independence members, members with accounting background and a high frequency of meeting) audit committee lead to improve the effective monitoring mechanism of the firm which indicates that firms can possibly enhance their firm performance by executing good governance of the firm.