The role of audit committee attributes in enhancing financial reporting value relevance in Saudi Arabia
Year: 2025
Type: article
Abstract: Purpose: This study examines how audit committee characteristics moderate the value relevance of financial statement information for Saudi firms, providing evidence on whether audit committee governance complements accounting amounts for equity valuation.Design/methodology/approach: Using data from 125 Saudi listed non-financial firms from 2018-2022, the study employs balanced panel regression analysis to assess interactions between earnings, book values, and audit committee independence, size, meetings, and expertise in explaining stock prices.Findings: Audit committee independence and expertise improve the value relevance of earnings but not book value, while size and meetings enhance the relevance of both earnings and book value.Research limitations: The sample is limited to Saudi listed firms. Findings may not generalize to other contexts. However, an in-depth single country study provides targeted insights into the Saudi governance environment needed to inform regulators and firms on optimizing practices specifically within this evolving context.Practical implications : Firms should leverage audit committee governance mechanisms of independence, expertise, size, and frequent meetings to complement financial reporting in enhancing credibility and valuation usefulness.Originality/value: This study provides novel evidence that audit committee monitoring and financial reporting quality jointly strengthen value relevance in Saudi Arabia's concentrated ownership context.
Source: Cogent Business & Management
Authors: Abdulrahman Alomair, Abdulaziz Al Naim
Institution: King Faisal University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,165
Award: G1668032513
OpenAlex ID: W4416407817