The relationship between the audit committee, internal audit and firm performance

Abdulaziz Alzeban

Journal of Applied Accounting Research, 2020, vol. 21, issue 3, 437-454

Abstract: Purpose - This study explores the role played by audit committees (ACs) in illuminating the effectiveness of internal audit (IA) as a facilitator of the achievement of organisational goals, specifically examining whether the AC mediates the relationship between IA and firm performance (FP). Design/methodology/approach - Data are gathered from survey questionnaires directed to chief internal auditors (CIAs) and from the annual reports of 119 listed companies in Saudi Arabia (SA) and the United Arab Emirates (UAE). Ordinary least squares (OLS) regression and mediation tests are used to assess the study’s hypotheses. Findings - The findings indicate that the independence of the AC and having members with accounting and auditing expertise mediate the effects of IA independence and size on FP. However, no such mediation is found with respect to IA competence and FP. Further, AC meetings do not mediate the effects of IA characteristics on FP. Additional measures of the tested variables determine the robustness of the obtained findings. Originality/value - While much research examines the relationship between FP and corporate governance (CG) mechanisms, this study considers IA, as a key element of CG, and its impact on FP, which has received more limited attention. Hence, the findings contribute to the literature by providing new understandings regarding IA as a component of CG and its relationship with FP. Furthermore, they bring additional evidence of the influence of IA upon FP, which is mediated by AC independence and expertise.

Keywords: Internal audit; Audit committee; Firm performance; Internal audit independence; Saudi Arabia; UAE (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jaarpp:jaar-03-2019-0054

DOI: 10.1108/JAAR-03-2019-0054

Access Statistics for this article

Journal of Applied Accounting Research is currently edited by Associate Professor Orthodoxia Kyriacou

More articles in Journal of Applied Accounting Research from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().