Ownership structure and audit committee effectiveness: evidence from top GCC capitalized firms

Purpose The purpose of this study is to report on the level of audit committee (AC) effectiveness on the top capitalized firms in GCC countries and to empirically investigate the hypothesized influence of ownership types on the level of AC effectiveness. Design/methodology/approach The empirical dat...

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Bibliographic Details
Published in:International journal of Islamic and Middle Eastern finance and management 2019-08, Vol.12 (3), p.407-425
Main Authors: Al-Musali, Mahfoudh Abdulkarem, Qeshta, Mohammed Helmi, Al-Attafi, Mohamed Ali, Al-Ebel, Abood Mohammad
Format: Article
Language:English
Subjects:
Annual reports
Audit committees
Audits
Boards of directors
Capital markets
Codes
Committees
Companies
Corporate governance
Councils
Hypotheses
Institutional investments
Organizational structure
Outside directors
Ownership
Policy making
Profitability
Stockholders
Studies
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Summary:Purpose The purpose of this study is to report on the level of audit committee (AC) effectiveness on the top capitalized firms in GCC countries and to empirically investigate the hypothesized influence of ownership types on the level of AC effectiveness. Design/methodology/approach The empirical data were drawn from annual reports of 119 top listed firms in Gulf Co-operation Council (GCC) nations at the end of 2011. Ordinary least squares regression analysis was constructed to examine the relationships between ownership types and the level of AC effectiveness. Findings The findings revealed that family, government and institutional ownership, in addition to board independence, all have significant positive association with AC effectiveness, and they serve as a complement to AC effectiveness. Research limitations/implications The findings of the study are important for policy makers and regulators as they could use them to understand the relationship between different corporate governance mechanisms and formulating best strategies that would help them to improve and adopt an optimal governance system constituted from interacting governance mechanisms. Originality/value This study is one of few that have examined the interaction between different corporate governance mechanisms. It provides insights about the relationship between AC effectiveness and other governance mechanisms in the GCC context.
ISSN:1753-8394
1753-8408
DOI:10.1108/IMEFM-03-2018-0102