The impact of audit committee characteristics on firm performance: Evidence from Pakistan

The importance of an audit committee is increasingly being acknowledged in the literature, yet very little work has beendone on board committees in emerging economies. We extend thework that has alluded to the importance of the characteristics of directors (executive, non-executive and independent) with several unexplored, yet crucial, attributes represented in audit committees and additionally theorize and test how these audit committeecharacteristics play a role in an emerging economy context. Drawing attention on agency and stewardship theory, we teste dour assertions with data on the population of firms on the Karachi Stock Exchange in 2013. Our findings indicate that companies with more than three audit committee members and non-executive auditcommittee chairman are associated with higher economic value added (EVA). Furthermore, we also document positive relations between ex-chief participation in committee, audit committeechairman age, chairman qualification, and chairman’s financial expertise on several other financial performance indicators.