Audit committee chairman characteristics and corporate performance: Empirical evidence from Saudi Arabia

Abstract

The purpose of this paper is to investigate the impact of corporate governance (CG) characteristics, specifically audit committee chairman (ACC) characteristics. (tenure, expertise, and directorship) on corporate performance (CP). The study was executed on 44 firms, which were registered under the finance sector at Bursa Saudi Arabia. In terms of its scope, the study stretched over quite a long period of time and observed a considerable number of firms; more specifically, it lasted from 2015 to 2019, and observed 195 firms. The relationship between the characteristics of audit committee (AC) directors and CP has been studied extensively in the past. Nevertheless, few studies have investigated the ACC's characteristics. To the best of the researcher's knowledge, no study has yet studied the effect of CG's characteristics, specifically, the ACC characteristics on CP. The study’s conclusions indicate that corporate governance (CG) characteristics, specifically audit committee chairman (ACC) characteristics (tenure and expertise) are positively related to the performance of finance companies. However, the audit committee chairman’s multiple directorships, on the other hand, has no relationship with corporate performance. Review of literature on the audit committee chairman characteristics used in this study is offered, the practical implications and the recommendations for future research works is also emphasized.

Do corporate governance drive firm performance? Evidence from Indonesia

“…The finding is against the theory and prediction in the beginning. The finding is in line with the previous studies disclosing that the audit committee meeting cannot improve the firm performance (Al-Matari, 2022;Bansal & Sharma, 2016;Borlea et al, 2017;Fauzi et al, 2017). This finding is due to the relatively small number of Indonesian companies in the sample meeting frequency.…”

“…Nevertheless, a negative association between CG and firm performance has been discovered (Meah et al, 2021;Suhadak et al, 2019). Meanwhile, (Al-Matari, 2022;Bansal & Sharma, 2016;Borlea et al, 2017;Fauzi et al, 2017) failed to discover a significant correlation between CG and firm performance. Therefore, the study is conducted to fill the gap between the earlier studies.…”

The impact of longer audit committee chair tenure and board tenure on the level of sustainability disclosure: The moderating role of firm size

“…Few studies have examined the relationship between audit committee chair tenure. For instance, Al‐Matari (2022) found a positive impact of audit committee chair tenure on firm performance. Additionally, Gupta and Mahakud (2021) found that a longer tenure of audit committee members is positively correlated with performance and bank value.…”

Effects of Corporate Governance on Bank Risk Taking

“…From the theory of agency perspective, the audit committee is considered a tool to improve the quality of monitoring information flow between those who own the entity and those who ensure its management (Forker, 1992). Similarly, Al-Matari (2013) predicts that audit committees that meet more frequently are better informed about the company's circumstances and provide a more effective oversight and monitoring mechanism of financial activities, which includes the preparation and reporting of company financial information. Anasweh (2021) concludes that in Islamic banks and conventional banks, audit committee meetings have a significant positive effect on firms' performance.…”