Abstract:
This study intended to examine the association between audit committee
(AC) attributes and firm performance in Sri Lanka. The research analysed
a sample of 100 firm listed in Colombo Stock Exchange (CSE), Sri Lanka
for the period 2014-2018. Regression analysis was used to estimate
the assocaition between AC attributes and performance. The outcomes
revealed that AC attributes of firms, namely AC size, AC independence
and AC financial expertise are significantly correlated to firm performance
while there is no statistical significant impact of AC size on Tobin’s Q. An
exception was AC meetings which had an insignificant impact on both
performance measures (ROA and Tobin’s Q). In conclusion, the results
suggest that more active (i.e., more independent members, members with
accounting background and a high frequency of meetings) ACs lead to
improvement in the effective monitoring mechanism of the firm which
indicates that firms can possibly enhance their performance by executing
good governance of the firm. Thus, effort should be made to look at this
research in a more elaborate viewpoint and across the countries. The effect of
AC attributes on firm performance should fully examined in future research.
