Effects of Audit Committee Characteristics on the Financial Performance of Listed Industrial Goods Firms in Nigeria.

Abstract:

The role of the audit committee in ensuring effective corporate governance and enhancing financial performance has gained increasing attention in academic and professional discourse due to rising corporate failures. This study examined the effect of audit committee characteristics (proxy as audit committee size, audit committee composition, audit committee meetings, audit committee frequency of meeting, audit committee financial expertise, and audit committee gender diversity) on the financial performance (ROA) of listed industrial goods firms in Nigeria from 2013 to 2023. The data were analysed using panel regression analysis. Findings revealed that audit committee size has a significant positive effect on ROA of listed industrial firms in Nigeria, while audit committee independence has a significant positive effect on ROA of listed industrial firms in Nigeria. Audit committee meetings have an insignificant effect on ROA of listed industrial firms in Nigeria. The study found that audit committee financial expertise significantly affects financial performance while board gender diversity negatively affects financial performance. In conclusion, the audit committee plays a crucial role in enhancing the financial performance of industrial goods firms. By fostering improved oversight, accountability, and decision-making, larger audit committees contribute significantly to the overall financial health and sustainability of these firms. Based on the findings, the study recommends that firms within the industrial goods sector should consider optimizing their audit committee size as part of their strategic initiatives to achieve superior financial performance and long-term success.