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The role of audit committee compositions in influencing the quality of financial reporting
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Mohammed Khalaf Alshammari 
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
An audit committee (AC) is crucial for corporate governance (CG) as it enhances the financial reporting environment and helps prevent corporate and stock market collapses. This research aimed to determine the influence of AC compositions on the quality of financial reporting. The study measured the underlying components of International Financial Reporting Standards (IFRS), such as relevance, faithful representation, understandability, and comparability, by using the financial reporting quality index (FRQI) provided by van Beest et al. (2009), Agyei-Mensah (2022). The sample included 500 observations of 100 non-financial corporate entities from 2019 to 2023 in Saudi Arabia. It was analysed using a number of diagnostic tests and model specification, including ordinary least squares (OLS) regression, fixed effect model (FEM), random effects model (REM), and multicollinearity and autocorrelation tests. Conceptual principles derived from resource dependency and agency theories explain the outcomes of our examination. The study found empirical evidence of a significant and positive effect of an AC’s financial expertise and inclusion of independent members on the quality of financial reporting. The study may provide useful insights into regulatory bodies, investors, and moneylenders regarding the factors, especially from a qualitative perspective of financial reporting, that affect financial reporting quality (FRQ).
Keywords: Audit Committee, Qualitative Characteristics, Corporate Governance, Financial Reporting Quality, Agency Theory, Resource Dependency Theory
Authors’ individual contributions: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.
Declaration of conflicting interests: The Author declares that there is no conflict of interest.
JEL Classification: M0, M40, M41, M42, M48, M49
Received: 06.07.2025
Revised: 26.10.2025; 07.11.2025
Accepted: 01.12.2025
Published online: 03.12.2025
How to cite this paper: Alshammari, M. K. (2025). The role of audit committee compositions in influencing the quality of financial reporting. Corporate Board: Role, Duties and Composition, 21(4), 29–39. https://doi.org/10.22495/cbv21i4art3
