Audit Committee Characteristics and Firm Performance: Evidence from the Insurance Sector in Bahrain

Abstract

This study examines the impact of the Audit Committee's characteristics on the performance of the five insurance companies listed on the Bahrain Burse over the period from 2012 to 2019. This study uses four board characteristics indicators; the size of the audit committee, independence of the audit committee, frequency of meetings of the audit committee, and expertise of the audit committee. Besides, this study takes into account two control variables, such as company size and firm age. Three-panel models used with a different dependent variable for each one were used in this study. The results of the study showed a statistically significant negative relationship between meetings of the audit committee and performance. The size of the audit committee, the independence of the audit committee and the experience of the audit committee have no significant association with the performance of the insurance companies listed on the Bahrain Stock Exchange. Alternatively, other AC features, different from those examined in this work, can be examined in future studies, such as the financial experience of its chair, the tenure of the committee and family ownership.

The Moderating Effect of Audit Quality on the Impact of Audit Committee Characteristics and Performance: Evidence from Saudi Financial Companies

“…find that audit committee meetings is not associated with firm's performance. Qeshta et al (2021) find audit committee meetings insignificantly affects firm performance for Bahrani firms. Al-ahdal and Hashim (2022) in a recent study find audit committee meeting do little effect of firm performance for Indian firms.…”

“…In a different vein, Al-Matari et al ( 2012) find that audit committee size is negatively associated with lower firm's performance. Qeshta et al (2021) find audit committee size insignificantly affecting firm performance. Similarly, no significant association for audit committee size and firm performance is reported by Al-ahdal and Hashim (2022).…”

“…Al-Matari et al ( 2012) examined how audit committee independence affects firm performance of non-financial firms in Saudi Arabia and found no significant association. Qeshta et al (2021) report no significant association for audit committee independence and firm performance. Recently, Al-ahdal and Hashim (2022) replicated this finding for Indian sample.…”

“…Thus, this study focuses on these characteristics to show their effect of company performance. It also considers the interaction between these characteristics and big4 audit firms because that prior research reports inconsistent results for the direct effect of audit committee characteristics and performance Qeshta et al, 2021;Alahdal & Hashim, 2022) and that audit committee is the most internal corporate governance mechanism interacted with external auditors (Baatwah & Al-Qadasi, 2021).…”

“…Chaudhry et al (2020) find the financial expertise of audit committee is associated with greater performance. However, there are a number of studies showing no influence of audit committee financial expertise on firm performance Al-Mamun et al, 2014;Qeshta et al, 2021;Al-ahdal & Hashim, 2022). In Saudi Arabia, it is mandatory that audit committee members should have adequate familiarity with financial issues (CMA 2017).…”