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Audit Committee Compliance and Company Performance Nexus: Evidence from ASX Listed Companies

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  • Ismail Gani
  • Albert Wijeweera
  • Ian Eddie

Abstract

This study examines whether the compliance with the audit committee recommendations which the Australian Stock Exchange (ASX) Corporate Governance Council (2003, 2007, 2010, 2014) put forward as part of its corporate governance reforms has enhanced corporate performance of ASX listed companies. Using company performance variables for 97ASX listed companies in the materials sector, the study estimates six different company performance models under two major categories of accounting performance indicators and investor performance indicators. Result clearly suggest that among corporations that operated within the materials sector and ranked in the top 500 companies listed on the ASX, those that complied with ASX recommendation of audit committee requirements, have achieved a higher corporate performances as measured by return on assets (ROA) and return on equity (ROE) as opposed to those firms that did not comply with the recommendation.

Suggested Citation

  • Ismail Gani & Albert Wijeweera & Ian Eddie, 2017. "Audit Committee Compliance and Company Performance Nexus: Evidence from ASX Listed Companies," Business and Economic Research, Macrothink Institute, vol. 7(2), pages 135-145, December.
    • Handle: RePEc:mth:ber888:v:7:y:2017:i:2:p:135-145
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    References listed on IDEAS

    as
    1. Klein, April, 1998. "Firm Performance and Board Committee Structure," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 275-303, April.
    2. Husam Aldamen & Keith Duncan & Simone Kelly & Ray McNamara & Stephan Nagel, 2012. "Audit committee characteristics and firm performance during the global financial crisis," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 52(4), pages 971-1000, December.
    3. Aiyesha Dey, 2008. "Corporate Governance and Agency Conflicts," Journal of Accounting Research, Wiley Blackwell, vol. 46(5), pages 1143-1181, December.
    4. Richard Bozec, 2005. "Boards of Directors, Market Discipline and Firm Performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(9-10), pages 1921-1960.
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    Cited by:

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    2. Omar Habtoor, 2022. "The impact of audit committee characteristics on Saudi bank performance," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(6), pages 388-401, September.

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    More about this item

    Keywords

    Company performance; Audit committees; Corporate governance;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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