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Audit committee attributes and bank performance in Africa

Audit committee attributes and bank performance in Africa This study aims to evaluate how audit committee (AC) characteristics affect the performance of banks in Africa.Design/methodology/approachThe authors manually generated unbalanced panel data from 78 commercial banks operating in twelve (12) countries whose annual reports were published on the website of African Financials between 2010 and 2020.FindingsThe results indicate that AC size has an insignificant positive association with bank performance (return on equity and Tobin’s Q). AC independence has a significant positive association with bank performance. However, AC gender diversity has a significant negative association with bank performance. Besides, AC financial expertise has a significant positive and negative association with return on equity and Tobin’s Q, respectively.Research limitations/implicationsThe study considered only 78 banks that operate in twelve (12) African countries. Besides, the authors consider only four (4) AC attributes.Practical implicationsThe findings suggest the need to maintain a smaller AC, appoint more independent members to AC, reduce the number of women appointed to AC and ensure most AC members have financial expertise. These measures could improve bank performance in Africa.Originality/valueUnlike previous African studies that are mostly restricted to a country level, the study examined how AC attributes influence the performance of banks that operate in Africa. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Corporate Governance Emerald Publishing

Audit committee attributes and bank performance in Africa

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References (72)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1472-0701
eISSN
1472-0701
DOI
10.1108/cg-03-2023-0098
Publisher site
See Article on Publisher Site

Abstract

This study aims to evaluate how audit committee (AC) characteristics affect the performance of banks in Africa.Design/methodology/approachThe authors manually generated unbalanced panel data from 78 commercial banks operating in twelve (12) countries whose annual reports were published on the website of African Financials between 2010 and 2020.FindingsThe results indicate that AC size has an insignificant positive association with bank performance (return on equity and Tobin’s Q). AC independence has a significant positive association with bank performance. However, AC gender diversity has a significant negative association with bank performance. Besides, AC financial expertise has a significant positive and negative association with return on equity and Tobin’s Q, respectively.Research limitations/implicationsThe study considered only 78 banks that operate in twelve (12) African countries. Besides, the authors consider only four (4) AC attributes.Practical implicationsThe findings suggest the need to maintain a smaller AC, appoint more independent members to AC, reduce the number of women appointed to AC and ensure most AC members have financial expertise. These measures could improve bank performance in Africa.Originality/valueUnlike previous African studies that are mostly restricted to a country level, the study examined how AC attributes influence the performance of banks that operate in Africa.

Journal

Corporate Governance – Emerald Publishing

Published: Aug 27, 2024

Keywords: Corporate governance; Audit committee; Financial performance; Banks; Africa

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