AUDIT COMMITTEE ATTRIBUTES AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS: EVIDENCE FROM NIGERIA

Abstract

This study examined the effect of audit committee characteristics on the financial performance of listed Nigerian deposit money banks, measured by ROA and ROE. The study was motivated by ongoing debates about therole of audit committee size, meeting frequency, independence, and expertise in improving governance and performance in emerging economies with evolving regulations. A quantitative panel design was used, utilising secondary data from the audited annual reports and financial statements of 12 listed deposit money banks from 2015 to 2024. The study employed Fixed Effects,Random Effects and Pooled Ordinary Least Squares (OLS) estimation methods. The findings revealed that the frequency of audit committee meetings was negatively related to both ROA and ROE at the 5% significance level. In addition, auditor size was negatively associated with ROE. Audit committee financial expertise exhibited a highly significant negative relationship with the performance measures at the 1% level. Overall, the study could not reject the null hypothesis; rather, it concluded that the audit committee's attributes negatively affect financial performance. The study finds that while stronger governance mechanisms can enhance oversight and accountability, they may also reduce short-term profits for Nigerian deposit money banks. The results support the Banking Governance Framework and indicate that effective governance relies not only on structural adherence but also on its practical implementation. The study suggests that regulators and bank boards should adopt a balanced, unique approach to audit committee governance, taking into account each bank's operational realities and strategic goals.