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Audit Committee Dimension and Firm Profitability in Central and Eastern European Countries

Paula-Andreea Terinte
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Paula-Andreea Terinte: “Alexandru Ioan Cuza" University of Iași

Ovidius University Annals, Economic Sciences Series, 2019, vol. XIX, issue 2, 908-915

Abstract: The aim of the paper is to analyze the association between audit committee dimension and firm profitability, using a sample of listed companies from Central and Eastern European countries. In order to conduct the analysis, the data regarding the audit variable is hand-collated data from the Annual Reports of the companies, data regarding the financial characteristics of companies is from Orbis database, and data regarding the macroeconomic variables is from Word Bank database. Using OLS model we found that audit committee size positively influences firm profitability through better monitoring operating performance of the company providing higher authority and extensive knowledge base reflected in increased profitability. Our results benefit corporate practices as evidence in straining the role of audit committees, support shareholders and managers by providing evidence and solutions to improve credibility and compliance of financial statements, as well as investors and creditors in sustaining efficient allocation and monitoring of their capital.

Keywords: Internal Audit Committee; firm profitability; CEE countries (search for similar items in EconPapers)
JEL-codes: M42 L25 (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:ovi:oviste:v:xix:y:2019:i:2:p:908-915