THE IMPACT OF FIRM AGE ON INDEPENDENT AUDIT COMMITTEE AND VOLUNTARY DISCLOSURE QUALITY

Abstract

Purpose: This research explores to what extent Independent Audit Committees impact Voluntary Disclosure and studies whether a firm's age moderates this relationship in developing economies. Design/Methodology/Approach: The research employs a longitudinal approach, examining data from 2009 to 2021. The Durbin-Wu-Hausman test was used to assess the existence of endogeneity in the regression model, and a multicollinearity test was conducted to evaluate the level of correlation between independent variables in regression models to ensure the validity and stability of the results. Findings: The regression analysis demonstrates a positive and significant relationship between the existence of Independent Audit Committees (IAC) and Voluntary Disclosure (VD). However, the study outcome showed that the interlinkage term between IAC and a firm's age was not statistically significant, implying that firm age immaterially alters the importance of audit committees in voluntary disclosure practices. Research Limitation: The study focused only on three African countries. Future research might look at other African countries Practical Implication: The study highlights the important function of IACs in improving transparency and promoting trust in financial reporting, particularly in markets with less regulatory oversight. Understanding factors that increase a company’s disclosure is crucial for the success of the global market and economy. Social Implication: This research's findings will support transparency in reporting, reduce information asymmetry, increase sustainability reporting, and increase investors' confidence in a company’s financial and social reporting. Originality/ Value: The research's novelty is bridging the gap in the literature by studying the influence of firm age on voluntary disclosure.