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Audit Committee and Financial Distress in the Middle East Context: Evidence of the Lebanese Financial Institutions

Author

Listed:
  • Charbel Salloum

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

  • Georges Azzi

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

  • Elias Gebrayel

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

Abstract

The purpose of this paper is to detect the impact of audit committee characteristics on Lebanese financially distressed and non-distressed banks. Four characteristics of the audit committee are being examined; size, composition, frequency of meeting and financial expertise. The sample includes 54 ebanese banks with fiscal years-end between 2009 and 2011. The financially distressed and non-distressed banks have been identified from bank profitability. Our Results show that the financial distress of banks has a significant negative relation with the meeting frequency of the audit committee. Hence, the evidence suggests that the meeting frequency of audit committee members is an important factor as it helps the audit committee to hinder the financial distress of the bank. Meeting frequency plays an important role to ensure audit committee effectiveness. In other words, the audit committee with frequent meetings is able to help audit committee members to ensure the integrity of financial reporting, to provide better monitoring and to review effectively the operations. The establishment decision of audit committee was adopted in 2008 and was modified in 2010 in Lebanese banks. Then, this study examines an actuality subject. Consequently, this paper represented an added value to the corporate governance in Lebanese banks and shows the importance of the audit committee impact on financial performance. Future studies concentrate on the impact of managerial dominance over the board (board composition, CEO duality and management ownership) on the independence of audit committee which may have an influence on bank performance.

Suggested Citation

  • Charbel Salloum & Georges Azzi & Elias Gebrayel, 2014. "Audit Committee and Financial Distress in the Middle East Context: Evidence of the Lebanese Financial Institutions," Post-Print hal-01370168, HAL.
    • Handle: RePEc:hal:journl:hal-01370168
    DOI: 10.1016/j.ism.2014.09.001
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    Citations

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    Cited by:

    1. Amina Zgarni & Hassouna Fadhila & Moez El Gaied, 2018. "Audit Committee and Discretionary Loan Loss Provisions in Tunisian Commercial Banks," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(3), pages 169-169, February.
    2. Sumaira Ashraf & Elisabete G. S. Félix & Zélia Serrasqueiro, 2022. "Does board committee independence affect financial distress likelihood? A comparison of China with the UK," Asia Pacific Journal of Management, Springer, vol. 39(2), pages 723-761, June.
    3. Mst. Maksuda Begum & Niluthpaul Sarker & Shamsun Nahar, 2023. "The Impact of Corporate Governance Attributes on Financial Distress among the Listed Firms in Pharmaceuticals Industry of Bangladesh," International Journal of Economics and Financial Issues, Econjournals, vol. 13(6), pages 155-167, November.
    4. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, January.
    5. Charbel Salloum & George Jabbour & Jacques Digout & Elias Gebrayel, 2015. "Managerial Dominance over the Board and Audit Committee Independence in Financial Institutions," Post-Print hal-01371710, HAL.
    6. Sunusi Garba* & Mudzamir Bin Mohamed, 2018. "Ownership Structure and Profitability: The Moderating Effect of Audit Committee Financial Expertise," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 396-401:6.
    7. Fitriya Fauzi & Abdul Basyith & Dani Foo, 2017. "Committee on board: Does it matter? A study of Indonesian Sharia-listed firms," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1316547-131, January.
    8. Olusola David Fajembola & Nora Azureen Abdul Rahman & Rohani Md-Rus, 2018. "Audit Committee and Banking System Stability: A Conceptual Framework," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 8(6), pages 463-474, June.
    9. Umair Bin Yousaf & Khalil Jebran & Irfan Ullah, 2024. "Corporate governance and financial distress: A review of the theoretical and empirical literature," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 1627-1679, April.
    10. Bravo-Urquiza, Francisco & Moreno-Ureba, Elena, 2021. "Does compliance with corporate governance codes help to mitigate financial distress?," Research in International Business and Finance, Elsevier, vol. 55(C).
    11. Mohamed Marie & Hany Kamel & Israa Elbendary, 2021. "How does internal governance affect banks’ financial stability? Empirical evidence from Egypt," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(3), pages 240-255, September.
    12. Ilyass Chaker, 2022. "Les caractéristiques des comités d'audit : Déterminants de la performance financière et de la qualité informationnelle ?," Post-Print hal-03680709, HAL.
    13. Abubakr Saeed & Qasim Ali & Hammad Riaz & Muhammad Asif Khan, 2022. "Audit Committee Independence and Auditor Reporting for Financially Distressed Companies: Evidence From an Emerging Economy," SAGE Open, , vol. 12(2), pages 21582440221, April.

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