FEMALE DIRECTORS’ INFLUENCE ON FINANCIAL PERFORMANCE: DOES AUDIT COMMITTEE PLAY A ROLE?
Keywords:
audit committee, financial performance, profitability, return on equity, women directorsAbstract
Based on the Agency Theory, female managers and directors are agents representing shareholders who are their principals. The interest of the shareholders is to maximize their wealth. This is achievable by ensuring that the corporations deliver huge financial performance. Financial performance is possible when the board of directors is truly effective. A major point of consideration is to appoint more women into the boards of corporations. In addition, the role of the audit committee in mediating between female directors and firm financial performance cannot be over-emphasised. Audit committee is one of the avenues through which board of directors performs its functions, including the appointment of external auditors; ensuring that the audit is of quality and that the financial report is of great value to investors. It is in view of this proposal that this article interrogates the impact of female executives on financial performance bearing in mind the mediating role of the audit committee size. The research design used is the correlational method. Thirteen (13) banks were investigated for a period of 10 years (2011-2020). The dataset was obtained from Machameratio database and statistically analysed using descriptive statistics, correlation analysis and simple regression models. Findings show that the association between female directors and firm financial performance is moderately and positively significant. Also, the nexus between financial performance and audit committee size is not significant. In addition, the link between female directors and audit committee size is not significant. Finally, audit committee failed both mediatory and moderatory roles.
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