Does AC effectiveness mediate the relationship between knowledge intensity and firm performance? Evidence from India

Abhisheck Kumar Singhania and Nagari Mohan Panda

Journal of Financial Reporting and Accounting, 2022, vol. 23, issue 1, 235-256

Abstract: Purpose - The study aims to investigate the mediation effect of the Audit Committee’s (AC) effectiveness on the relationship between knowledge intensity and firm performance (FP) by considering the disparate effect of each AC characteristic on its effectiveness. Design/methodology/approach - The study uses the partial least squares-structural equation model (PLS-SEM) to weigh the AC characteristics for its effectiveness and analyzes the relationships between the variables included in the models. Data was collected from authentic sources for 133 National Stock Exchange (NSE)-listed companies in six industries covering the period 2016 to 2020. Findings - The results indicate that eight out of eleven AC characteristics, namely, nonexecutive directors, independence, expertise, AC-charter, multiple directorships, frequency of AC meetings, attendance of AC meetings and board meetings by AC directors, significantly influence the AC effectiveness while mediating the relationship between knowledge intensity and FP. Further, each characteristic of AC has a disparate effect on AC effectiveness depending on the measurement context. Research limitations/implications - Apart from guiding the policymakers, management and stakeholders to effectively use AC characteristics in enhancing FP, this study further contributes to the literature by providing a new way to weight AC characteristics based on their individual contributions; and exploring new path models to analyze the multidimensional effect of various AC characteristics. Originality/value - To the best of the authors’ knowledge, the study is the first to examine the mediation role of AC effectiveness on the relationship between the knowledge intensity of the firms and their performance. It demonstrates improvisation in measuring AC effectiveness using the disparate weights for each AC characteristic, computed based on their relative contribution to AC effectiveness.

Keywords: Audit Committee; Firm performance; Knowledge intensity; PLS-SEM; Mediation effect; M4 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

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:jfrapp:jfra-06-2022-0214

DOI: 10.1108/JFRA-06-2022-0214

Access Statistics for this article

Journal of Financial Reporting and Accounting is currently edited by Prof. Aziz Jaafar and Prof Khaled Hussainey

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