The Impact of Board and Audit Characteristics on the Financial Performance of UAE Listed Firms

Abstract

Purpose – The purpose of this paper is to provide empirical insights on the impact of board and audit committee characteristics on the financial performance of United Arab Emirates (UAE) listed firms.Design/methodology/approach – A multiple regression panel model was employed for the period 2006 to 2015. The analysis incorporates Anderson Lagrange Multiplier test and Hausman test to determine if a fixed effects or random effects model should be employed.Findings – Our results demonstrated that board size and board meetings had a significant positive relationship with financial performance while there were also significant positive relationships between both audit committee composition and audit committee members’ education and firm financial performance.Research limitations/implications – The findings inform UAE firms about the benefits of employing directors with a more diverse skill set to enhance board effectiveness as well as having audit committee members hold a recognised qualification in finance or accounting to improve firm financial performance.Originality/value – Our study contributes to the CG literature by adding to the limited studies on CG in the UAE which help reduce the significant gap between foundation theories and practical applicability.