Impact of Audit Committee Characteristics on the Financial Performance of Non-Financial Companies Listed on the Casablanca Stock Exchange

Abstract

This article examines the impact of audit committee characteristics on the financial performance of non-financial companies listed on the Casablanca Stock Exchange during the period 2018-2022. Based on a sample of 47 companies, the study employs a multiple linear regression analysis with panel data, utilizing a generalized least squares estimator. The Hausman test was used to select a random effects model. The results indicate that the expertise and independence of audit committee members have a significant positive influence on return on assets (ROA). In contrast, an overly large committee size is associated with lower financial performance. The study also reveals that the activity of the audit committee, along with control variables such as the age of the company and its sector, has no significant correlation with financial performance. These findings highlight the importance of a well-structured and competent audit committee in enhancing the performance of Moroccan companies. Furthermore, they underscore the necessity of strong corporate governance, encouraging companies to prioritize independence and expertise within their audit committees to maximize their financial performance. This research paves the way for further studies aimed at analyzing these relationships in various contexts and over longer periods.

Keywords: Audit committee, financial performance, return on assets (ROA), corporate governance, panel data.

JEL Classification: L25, M41, M42

Paper type: Empirical Research