Does Audit Committee Characteristics Drive Financial Performance? A Case of Nigerian Service Firms

Abstract

This study was carried out to assess whether audit committee characteristics drive financial performance of publicly quoted service firms in Nigeria. Audit committee characteristic was measured using audit committee size and independence, financial performance by return on equity and earnings per share, while control variable is natural logarithm of total assets. Data were
obtained from the annual reports and accounts of sixteen (16) publicly quoted service firms during the period 2012-2019. Multivariate estimation technique was employed in the analysis of data and findings indicated that audit committee characteristics significantly and positively affect financial performance. Moreover, while financial performance measure of return on equity negatively affects the size of firm, earnings per share do not. In view of the findings, it is recommended that the audit
committee members should be empowered to be more independent in order to ensure significant audit that can propel financial performance; this would enhance financial performance of publicly quoted companies.