Do Audit Committees and Corporate Governance Mechanisms Affect the Bank’s Performance? Empirical Evidence from Panel Data Analysis

Abstract

This paper assessed the effect of audit committee independence and corporate governance mechanism on a bank's performance. A quantitative research method was adopted to collect secondary data from 20 licensed banks in Ghana from 2013 to 2022, giving a total of 200 observations for this study. Panel data regression analysis revealed that audit committee independence and corporate governance mechanism accounted for 77.83% of the variation of the bank's performance for the period under study. Furthermore, the study revealed a significant and positive relationship between CEO-non-duality, non-executive director, audit committee independence, and the bank's performance. The study recommends that the chairman of both the board and audit committee should be independent directors and any offending firm who violated this provision should be fined.

The Moderating Effect of Corporate Governance Mechanisms on the Nexus between Sustainability Reporting and the Value of Nigerian-Listed Manufacturing Companies

“…It indicates that the number of outside directors does not significantly strengthen the effect of SR on a company's FV, as reflected in Tobin's Q and EVA. The findings diverge from the findings of Iskandar et al (2023) and Eklemet et al (2023) and the theoretical assertion of Agency theory, which postulated that effective CG mechanisms mitigate agency problems by monitoring managerial actions, ensuring transparency, and aligning management's interests with shareholders (Eklemet et al, 2023), thus strengthening the relationship between SR and FV. Furthermore, the findings align with Siddiqui et al (2023) andHashem et al (2023), who asserted that more independent directors effectively align stakeholders' interests for voluntary disclosure, thereby increasing FV as reflected in Tobin's Q.…”

“…Theoretically, this is in contrast to the assertion of Agency theory, which postulated that effective CG mechanisms mitigate agency problems by monitoring managerial actions, ensuring transparency, and aligning management's interests with shareholders (Eklemet et al, 2023), thus strengthening the relationship between SR and FV. The findings align with Buallay's (2020) and Iskandar et al (2023) findings that BS does not significantly moderate the nexus between SR quality and FV and contradict that of Lu (2020) Pekovic and Vogt (2020) and Pasko et al (2022) for establishing that BS has a significant moderating effect on Tobin's Q.…”

“…When used in SR, the theory posits that managers might prioritise their interests over shareholders. Effective CG mechanisms, such as independent boards and strong audit committees, mitigate agency problems by monitoring managerial actions, ensuring transparency, and aligning management's interests with shareholders (Eklemet et al, 2023), thereby moderating the relationship between SR and FV.…”

Impact of Audit Committee Effectiveness on Accrual and Real Earnings Management among Jordanian Listed Firms: Conceptual Paper

“…The authors found that AC independence is positively associated with CG disclosure. Eklemet et al (2023) assessed the effect of AC independence and CG mechanisms on a bank's performance. They found that AC independence is positively associated with bank performance.…”