Audit committee characteristics: an empirical investigation of the contribution to intellectual capital efficiency

• Published in: Measuring business excellence Vol. 22; no. 2; pp. 183 - 200
• Main Author: Buallay, Amina
• Format: Journal Article
• Language: English
• Published: Bradford Emerald Publishing Limited 18.06.2018; Emerald Group Publishing Limited
• Subjects: Accounting; Age; Audit committees; Boards of directors; Competitive advantage; Corporate governance; Dependency theory; Directors; Efficiency; Financial reporting; Financial statements; Human capital; Hypotheses; Intellectual capital; Internal auditors; Literature reviews; Meetings; Studies; Variables; Banks; Intellectual capital; Audit committee; GCC countries; MVAIC
• ISSN: 1368-3047; 1758-8057
• DOI: 10.1108/MBE-09-2017-0064

Purpose In a knowledge economy, it is generally agreed that audit committees play a significant role in supporting the overall firm’s knowledge, particularly enhancing the reporting process. In this respect, this paper aims to examine the effect of audit committee characteristics on intellectual capital efficiency. Design/methodology/approach This study examined 59 banks for five years (2011-2015), obtaining 295 observations. The study’s independent variable is audit committee characteristics. The dependent variable is intellectual capital components (Human: human capital efficiency [HCE]; Structural: structural capital efficiency [SCE]; Relational: relational capital efficiency [RCE]; and Physical/Financial: capital employed efficiency [CEE]). In addition, the study used four bank-specific control variables. Findings The findings deduced from the empirical results demonstrate that there is a significant positive impact of audit committee characteristics on intellectual capital. Moreover, the relationship between audit committee and intellectual capital components (HCE, SCE, RCE and CEE) also has a significant positive relationship if measured individually. Originality/value The study provides insights about the relationship between audit committee characteristics and the improvement in intellectual capital efficiency, which might be used by firms to re-arrange the roles within audit committee, to reassign internal priorities and to escalate position in their environment.