dc.description.abstract | The composition and character of the audit committee play significant role in influencing
quality of an organization performance. However, very few studies have addressed or
even shown how audit committee composition and character influence firm performance
in developing countries such as Kenya. This research aims at establishing the effect of
audit committee characteristics on firm performance among listed firms in Nairobi
securities exchange, Kenya. To establish the effect of audit committee size on firm
performance, to ascertain the impact of the number of independent auditors on firm
performance, to determine the effect of audit committee gender diversity on firm
performance and establish the effect of audit committee experience on firm performance.
The study uses the agency theory and institutional theory. This study adopted an
explanatory design. The study was conducted in firms listed on the Nairobi Securities
Exchange for the period ranging from 2006 to 2011. The study thus utilized data from 46
companies as the other 14 companies had either been recently listed or had inconsistently
traded in the NSE. Descriptive statistics such as means, standard deviation, frequencies
and percentage were used to analyze data. In addition, Multiple Regressions was used
because of its ability to use multiple independent variables to estimate their effect on a
single dependent variable. Research findings showed that audit committee experience,
committee gender diversity, audit committee size and number of independent auditors has
a significant effect on firm performance. The presence of audit members with experience
will also reduce financial misreporting and enhance quality monitoring. As such, having
experienced audit committee members should be a key priority for firms. Also an
increase in the number of female members bring on board a wide array of experiences
and talents there is need to increase the proportion of independent auditors since an
increase in their number reduces the chances of financial misreporting and leads to
positive perception by investors there is need for firms to have an audit committee that is
not too small such that there is lack of expert advice and not too large such that it has free
riders that are prone to follow other members opinion | en_US |