Audit Committee Effectiveness and Company Performance: Evidence from Egypt
ElHawary, E. (2021). Audit committee effectiveness and company performance: Evidence from Egypt. Journal of Governance & Regulation, 10(2), 134–156. https://doi.org/10.22495/jgrv10i2art12
23 Pages Posted: 3 May 2021 Last revised: 5 May 2021
Date Written: April 24, 2021
The purpose of this paper is to investigate the impact of audit committee characteristics (size, independence, experience, gender diversity, and frequency of meetings) on the company‘s financial performance (ROA and ROE) in Egypt. In 2016, the Egyptian Stock Exchange announced a new listing requirement for the audit committee members‘ characteristics to enhance its effectiveness. Data are gathered from the board of directors (BOD) and annual reports of the EGX 30 index non-financial listed companies in Egypt for the period of 2016–2018. Data is analyzed by using panel data cross-section data analysis and correlation analysis. The findings reveal that the audit committee size has a significant relationship with ROA only and committee members‘ experience is significantly related with ROE only. The other characteristics (independence, meetings, and gender diversity) have no impact on ROA and ROE. Such findings contribute to the literature by providing new understandings regarding the audit committee as a key component of corporate governance and its impact on financial performance. It could also guide and improve the boards‘ selection of the audit committee members and gives Egyptian regulators a better understanding of the impact of their latest listing requirements on protecting the shareholders‘ interests and increasing their confidence through having transparent financial statements.
Keywords: Corporate Governance, Audit Committee, Auditor Independence, Experience, Firm Performance, Egyptian Stock Exchange
JEL Classification: C22, C83, G32, G38, M42
Suggested Citation: Suggested Citation