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Complicated Relationships among Audit Committee Independence, Nonfinancial and Financial Performance

Author

Listed:
  • David Han-Min Wang

    (Department of Accounting, Feng Chia University)

  • Quang Linh Huynh

    (PhD Program in Business, Feng Chia University, Taichung, Taiwan, Faculty of Economics, Laws and Foreign Languages, Tra Vinh University)

Abstract

The relationships among the audit committee independence, nonfinancial performance and financial performance are quite complicated. They are not simply bivariate correlations. Rather, there may be mediating effects or moderating influences on these casual associations. Nonetheless, previous research has not investigated these complicated relationships. This paper seeks to examine the mediating impact of nonfinancial performance on the association between the audit committee independence and financial performance. Further, it also explores the moderating role of the audit committee independence in the influence of nonfinancial performance on financial performance. The findings imply that nonfinancial performance interferes with the effect of the audit committee independence on financial performance, in which it lessens this effect. The empirical results also suggest that the audit committee independence plays the moderating role in the relationship between nonfinancial performance and financial performance, in which the independence of the audit committee is positively related to this relationship.

Suggested Citation

  • David Han-Min Wang & Quang Linh Huynh, 2013. "Complicated Relationships among Audit Committee Independence, Nonfinancial and Financial Performance," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(5), pages 1-2, October.
    • Handle: RePEc:spp:jkmeit:1407
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    References listed on IDEAS

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    1. Belloc, Filippo, 2010. "Corporate governance and innovation: an organizational perspective," MPRA Paper 21495, University Library of Munich, Germany.
    2. Lambert, RA, 1998. "Customer satisfaction and future financial performance discussion of are nonfinancial measures leading indicators of financial performance? Are analysis of customer satisfaction," Journal of Accounting Research, Wiley Blackwell, vol. 36, pages 37-46.
    3. Rajiv D. Banker & Raj Mashruwala, 2007. "The Moderating Role of Competition in the Relationship between Nonfinancial Measures and Future Financial Performance," Contemporary Accounting Research, John Wiley & Sons, vol. 24(3), pages 763-793, September.
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