| Pub. Date | : October, 2023 |
|---|---|
| Product Name | : The IUP Journal of Accounting Research and Audit Practices |
| Product Type | : Article |
| Product Code | : IJARAP051023 |
| Author Name | : Abhisheck Kumar Singhania and Nagari Mohan Panda |
| Availability | : YES |
| Subject/Domain | : Finance |
| Download Format | : PDF Format |
| No. of Pages | : 23 |
The paper investigates the effect of eleven Audit Committee (AC) characteristics on Firm Performance (FP). It identifies characteristics that significantly influence FP and develops an index to provide a holistic approach to the relationship between AC effectiveness and FP. It applies cross-sectional time-series FGLS regression and checks robustness using panel-corrected standard error regression after identifying heteroscedasticity, autocorrelation, and cross-sectional dependence of 375 observations. The study finds a significant positive effect of AC expertise, attendance in AC meetings, and the absence of executive directors in AC on both Return on Assets (ROA) and market capitalization of the firms. Gender diversity is exclusively significant for ROA, while shareholding positively impacts firm's market capitalization. This study is the first to use some new individual AC characteristics like the absence of executive directors in AC and AC charter and representation of AC members in board meetings.
Research on the influence of Corporate Governance (CG) on Firm Performance (FP) has gained momentum in the past few years . Scams in the near past relating to Toshiba, Satyam, WorldCom and Enron have shattered the trustworthiness of the corporate. In light of these disastrous accounting frauds, the need to improve the quality of governance has been pointed out by a nimiety of previous research (Farber, 2005; and Mishra et al., 2021). Effective CG has the potential to regain investors' confidence and enhance the managerial capacity of the corporate.