Audit Committee Effectiveness in Family & Non Family Firms Listed in Tehran Stock Exchange

Abstract

The Different ownership structure and remarkable increase of family-owned firms in recent years, necessitate doing numerous studies. Therefore, this study investigates effectiveness of audit committee in these types of firms compared to other firms. The sample of this study includes 32 family firms and 144 non-family firms listed in Tehran Stock Exchange from 2015 to 2019. Data analysis and hypotheses test is based on the multivariate regression model and panel data. Effectiveness of the audit committee is measured by two criteria of return on assets (ROA) and market value added (MVA). Audit committee measurement indicators include the size of the audit committee, the financial expertise of audit committee members, and the independence of the audit committee. The results show that family involvement reduces the effectiveness of audit committee size based on the criteria of return on assets and market value added as well as the effectiveness of the financial expertise of the members of the audit committee based on return on assets. However, the results indicate that family involvement does not affect the effectiveness of the Audit Committee's independence based on the criteria of return on assets and market value added, as well as the effectiveness of the financial expertise of the members of the Audit Committee based on the Market Value Added. ‌

Keywords

• family involvement
• financial performance
• corporate governance
• audit committee