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Impact of audit committee attributes on financial distress: Evidence from Pakistan

Author

Listed:
  • Muqaddas Khalid

    (Department of Management Sciences, COMSATS University Islamabad, Lahore Campus, Pakistan)

  • Qaisar Abbas

    (Department of Management Sciences, COMSATS University Islamabad, Lahore Campus, Pakistan)

  • Fizzah Malik

    (#x2020;School of Management, Xi’an Jiaotong University, Xi’an, Shaanxi, P. R. China)

  • Shahid Ali

    (#x2020;School of Management, Xi’an Jiaotong University, Xi’an, Shaanxi, P. R. China)

Abstract

This research study compares the financially distressed and financially healthy companies, based on their audit committee attributes over the 2006–2010 period. While focusing on the manufacturing sector of Pakistan, the logit regression results reveal that audit committee composition and audit committee opinion have significant impact on the financial distress of the companies while audit committee size has insignificant impact on financial distress. The first of its kind, this study, benefits investors, financial analysts, accounting professionals, and practitioners. Their decision-making process will be enhanced regarding the evaluation of financially distressed companies and financially healthy ones. Despite its limitations, this study fills up the literature gap by focusing on the financially distressed firms that have not yet been bankrupted, thus giving them a chance to restructure their policies regarding the implementation of corporate governance practices in the context of Pakistan. This study has ignored financial sector of Pakistan because of different reporting styles of financial firms. The periods before and after the period of financial distress have also been ignored in the study.

Suggested Citation

  • Muqaddas Khalid & Qaisar Abbas & Fizzah Malik & Shahid Ali, 2020. "Impact of audit committee attributes on financial distress: Evidence from Pakistan," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-19, March.
    • Handle: RePEc:wsi:ijfexx:v:07:y:2020:i:01:n:s242478632050005x
    DOI: 10.1142/S242478632050005X
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