Audit Committee and Going-Concern in Nigerian Financial Institutions

Abstract

This paper studies the impact of the audit committee on the going-concern of Nigerian financial institutions. The final sample of twenty-nine (29) firms using period of 2006 to 2015. These have been utilised using Driscoll and Kraay's standard errors estimation. The results found that audit committee financial expertise have a significant positive influence on going-concern of Nigerian financial institutions. However, audit committee size and independence have a negative influence on goingconcern of Nigerian financial institutions. This implies the size or independence of audit committees alone with financial know-how do not have a direct positive effect on the health status of companies. It recommended that regulators increase the number of audit committee members with know-how from at least one (1), however, to a minimum of 60% so as to safeguard the going-concern of the financial institutions in Nigeria.

Audit committee attributes and Islamic bank risk-taking behavior

“…2.3 Empirical review and hypotheses 2.3.1 Audit committee size. In line with the agency theory and prior studies, having a large number of AC members can improve the committee's efficiency of internal checking and the going concern of a company (Garba and Mohamed, 2018). Similarly, AC with a large number of members tends to perform better in terms of risk management quality as advocated by the resource dependency theory (Abdullah et al, 2017).…”

“…The agency relationship is believed to be a network of contacts between the principals who own the economic resources and the agents who have been given authority to use and manage other people's resources (Jensen and Meckling, 1976). The agency theory postulates that AC plays an essential role in watching over key activities of firms that are crucial to their continuity (Garba and Mohamed, 2018). The agency theory and previous studies show that AC independence can assist shareholders in monitoring the firm's going concern status (Garba and Mohamed, 2018).…”

“…The agency theory postulates that AC plays an essential role in watching over key activities of firms that are crucial to their continuity (Garba and Mohamed, 2018). The agency theory and previous studies show that AC independence can assist shareholders in monitoring the firm's going concern status (Garba and Mohamed, 2018). Hence, appointing independent directors to AC is one of the key strategies to minimize the agent's self-serving character (Kallamu and Saat, 2015).…”

“…However, Sun and Liu (2014) established a significant positive relationship between AC size and bank risktaking. In the Nigerian context, a study by Garba and Mohamed (2018) indicates that AC size reduces the going concern status of financial institutions. Besides, Nguyen (2019) finds that AC size reduces the stability of banks in Vietnam.…”

“…Nguyen (2021) established AC independence restrains conventional banks from excessive risk-taking. However, a study by Garba and Mohamed (2018) reveals that AC independence diminishes the going concern of financial institutions in Nigeria. Similarly, Nyumutsu (2019) finds that AC independence reduces bank stability in Ghana.…”