Audit committee attributes and bank performance in Africa

Abstract

Purpose This study aims to evaluate how audit committee (AC) characteristics affect the performance of banks in Africa. Design/methodology/approach The authors manually generated unbalanced panel data from 78 commercial banks operating in twelve (12) countries whose annual reports were published on the website of African Financials between 2010 and 2020. Findings The results indicate that AC size has an insignificant positive association with bank performance (return on equity and Tobin’s Q). AC independence has a significant positive association with bank performance. However, AC gender diversity has a significant negative association with bank performance. Besides, AC financial expertise has a significant positive and negative association with return on equity and Tobin’s Q, respectively. Research limitations/implications The study considered only 78 banks that operate in twelve (12) African countries. Besides, the authors consider only four (4) AC attributes. Practical implications The findings suggest the need to maintain a smaller AC, appoint more independent members to AC, reduce the number of women appointed to AC and ensure most AC members have financial expertise. These measures could improve bank performance in Africa. Originality/value Unlike previous African studies that are mostly restricted to a country level, the study examined how AC attributes influence the performance of banks that operate in Africa.