A Conceptual Model For Firm Performance Through Audit Committee And Audit Quality

Abstract

It is evident through past literature that theoretical and conceptual gap exist in the Jordanian industrial sector regarding auditing characteristics. Therefore, the study aims to develop a conceptual model for firm performance base on audit committee and audit quality. Based on the agency theory a comprehensive framework was developed. Past literature was synthesised to conceptualize the relationship between audit committee characteristics, audit quality and firm performance. Dimensions of the audit characteristics and audit quality were elaborated accordingly. It is recommended that the ability of managers to manage reported earnings opportunistically is constrained by the effectiveness of internal monitoring such as audit committee. Activating audit committees leads to increased firm performance, because an activated audit committee will restrict the different methods of discrepancies in the firm's revenues. Thus, this study discusses one of the elements of corporate governance. The framework developed can be tested in the other settings and empirical findings in future will validate this framework.