Audit committee characteristics and corporate philanthropic donations before and during COVID-19

Abstract

Purpose This study aims to examine the effects of audit committee attributes on corporate philanthropic donations before and during the COVID-19 pandemic. Design/methodology/approach The study targets Nigeria’s listed firms between 2019 and 2020. We hand-collected the data from the available published annual reports of 141 and 128 firms for 2019 and 2020, respectively. Therefore, the authors used a total of 269 firm-year observations for the study. The authors used ordinary least square regression to analyze the data and Tobit regression to establish the robustness of the results. Findings The results indicate that the frequency of audit committee meetings has a significant positive relationship with corporate philanthropic donations before and during COVID-19. In the case of audit committee independence, it has only a significant positive relationship with corporate philanthropic donations during the pandemic. However, the findings reveal that audit committee size and foreign directors on the audit committee do not influence corporate philanthropic donations before and during COVID-19. Research limitations/implications The study considers audit committee characteristics out of the corporate governance mechanisms that can influence the philanthropic donations of the listed firms in Nigeria over two years from 2019 and 2020. Practical implications The findings have practical implications for encouraging the audit committee to support philanthropic donations for the welfare of the poor and the needy, particularly in difficult times like the COVID-19 period. The results could also help regulators and policymakers to provide regulations and policies that can encourage firms to participate actively in philanthropic activities to their best ability. Social implications Motivating firms to provide philanthropic donations for the welfare of underprivileged persons could strongly support the government’s effort to minimize the socioeconomic problems caused by COVID-19. Originality/value The study contributes to the scant literature that establishes the impact of audit committee attributes on firm philanthropic donations toward helping the poor and the needy in difficult periods.

Audit committee attributes and Islamic bank risk-taking behavior

“…Based on these criteria, ZSCORE, AC meetings and STDROA are not normally distributed. Hence, in line with Umar (2022), Umar et al (2022) and Umar et al (2023), these variables were winsorized at 5%. 4 presents the Pearson correlation matrix for all the study variables.…”

Board attributes and CSR expenditure before and during COVID-19

“…The skewness and kurtosis test shows that audit committee foreign directors (ACFD), size and leverage are not normally distributed as either their skewness or kurtosis values or both are greater than 3 and 10, respectively. Thus, these variables were winsorized at a 5% significant level as found in prior studies like Farber et al (2016), Bala et al (2020) and Umar et al (2022c). Table 3 also shows the variance inflation factor (VIF) results to check for the presence of multicollinearity or otherwise in the models.…”

“…In fact, in 2020, firms struggled for survival without bothering about profit maximization. Besides, during the pandemic, independent directors are expected to monitor the CSR spending of firms on charitable activities during COVID-19 to minimize their exposure to cash flow crises (Umar et al , 2022c).…”

“…The scope of firms' stakeholders covers beyond shareholders, employees and customers but also includes local people, the environment, consumers, the government and the general public (Hosain, 2020). Therefore, firms' operations should not only completely remain harmless but should protect the interests of the entire stakeholders and contribute Board attributes and CSR expenditure positively to their welfare (Umar et al, 2022c). Firms can gain the support of stakeholders and continuously operate when their activities are useful or less injurious to society (Khan et al, 2013).…”

“…The higher frequency of board meetings enables the board to pay more attention to social responsibility (Elmaghrabi, 2021). Following the arguments of Umar et al (2022c), holding more meetings during COVID-19 provides an avenue for board members to carefully discuss the extent to which the pandemic damaged the welfare of society and identify the areas to prioritize to mitigate its consequences. Besides, board meetings enable the board to decide on the appropriate amount of CSRE to spend on various CSR sectors (education, health, human and disaster relief, etc.)…”