Abstract
The purpose of this study is to analyze the relationship between different audit committee attributes and company performance in Bahrain. This paper investigates the impact of audit committee independence, size, and meeting frequency on company performance (employing ROE, ROA, and Tobin’s Q). Data from all 14 non-financial publicly listed companies on Bahrain Bourse during 2005–2019 were used. The results revealed that companies with independent audit committees and big audit committees in terms of size are performing poorly. It is also shown that the number of audit committee meetings does not affect company performance. Further, this study failed to find any association between the number of audit committee meetings and company performance. The findings show that shareholders might lack knowledge of the importance of corporate governance mechanisms. The results of this study should be of potential interest to different stakeholders, including regulators, investors, and auditors, in their attempts to improve company performance and monitoring mechanisms in emerging economies.
Highlights
The interest in examining the relationship between corporate governance mechanisms and company’s performance is escalating due to recent accounting scandals and corporate governance failures (Zhou et al, 2018)
The findings show that shareholders might lack knowledge of the importance of corporate governance mechanisms
This study examined the impact of audit committee characteristics on firm performance, investigating the effects of audit committee independence, audit committee size, and audit committee meetings on the performance of Bahraini non-financial listed companies
Summary
The interest in examining the relationship between corporate governance mechanisms and company’s performance is escalating due to recent accounting scandals and corporate governance failures (Zhou et al, 2018). Researchers and policy-makers have underlined the audit committee’s oversight responsibilities as a critical element of any corporate governance system. There is a belief that audit committees should protect the interest of investors.
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