Audit Committee Size, Experience and Firm Financial Performance. Evidence Nairobi Securities Exchange, Kenya

Abstract

The purpose of this paper was to establishing the effect of audit committee size and experience on firm performance among listed firms in Nairobi securities exchange, Kenya.. The study is informed by agency theory and institutional theory. The study was conducted in firms listed on the Nairobi Securities Exchange for the period ranging from 2006 to 2011. Multiple Regressions was used to test hypothesis. Research findings showed that audit committee experience and audit committee size a has a significant effect on firm performance. The presence of audit members with experience will also reduce financial misreporting and enhance quality monitoring. As such, having experienced audit committee members should be a key priority for firms. Also there is need for firms to have an audit committee that is not too small such that there is lack of expert advice and too large such that it has free riders that are prone to follow other members opinion.