پذیرش کمیته حسابرسی و ارزش شرکت Audit committee adoption and firm value: evidence from UK financial institutions

1. Introduction Shareholders appoint a board of directors to scrutinise the highest decisions made within a firm (Fama, 1980; Vafeas and Theodorou, 1998). The appointment is required by state or country incorporation laws. Boards also provide solutions to organisational problems, by monitoring and advising executives on important decisions concerning the firm (Bozec, 2005; Baldenius et al. 2014). The monitoring or advising of the board is intended to protect shareholder interests by providing an objective and independent review of the actions taken by corporate executives to reduce agency conflicts (Klein, 1998; Fama and Jensen, 1983). The directors on the board form part of the firm’s internal governance mechanism, which ensures that the interests of shareholders and managers are closely aligned (Kang et al. 2007). According to the Cadbury Report, 1992, the Combined Code, 2003, 2006, and the FRC, 2016, a board of directors should establish board committees for auditing, remuneration nomination, etc., to help improve efficiency. These committees are classified as key committees because of their contribution to organisational success as they help to assist in the dispatch of business activities by considering more detail than would be convenient for the whole board. Also, these committees enhance a firm’s corporate governance policies and improve investor confidence, eventually improving financial performance (Charkham, 2005; FRC, 2014; 2016; Cadbury Report, 1992; Combined Code, 2003, 2006). All such committees scrutinise decisions and solve organisational problems. This research aims to narrow down and focus on the adoption or the establishment of an audit committee (AC) as being one of the most important functions of the board of directors.