Does audit committee improve audit quality? The case of Saudi Arabia

Abstract

This paper investigates the potential correlation between the performance of Audit Committees (AC) and Audit Quality (AQ). Data is derived from capital goods firms listed on the main stock exchange of Saudi Arabia (TASI). Logit regression analysis is used for this purpose and the dependent variable of BIG4 is used as a proxy for AQ, while AC meetings (ACMT), size (ACSZ), and AC members with a financial background (ACEX) are used as explanatory variables. The results show no statistical association between ACMT and AQ. However, the analysis indicates a positive statistical relationship between ACSZ and AQ, and a strong negative association between ACEX and AQ. These findings provide insights into the impact of AC attributes on AQ, and would be of interest to decision makers, policy-makers, investors, and senior management.