Family ownership and the effectiveness of audit committee in Saudi Arabia

Abstract EN

This study aims at investigating the association between family ownership and the effectiveness of audit committee by Saudi listed companies.

The study utilizes a crosssectional analysis of 521 firm-year observations during the 2007-2011 period.

A pooled OLS regression analysis is used to estimate the association proposed in the hypothesis.

The study finds that family ownership is associated adversely with the effectiveness of audit committee.

The result of this study suggests that family controlled companies are characterized to not have good corporate governance practices in terms of the effectiveness of audit committee as an internal control and monitoring mechanism.

Further, the result of this study contributes to the existing theory and empirical evidence of how the effectiveness of audit committee is related negatively to the concentrated family ownership in a unique setting of corporate ownership and corporate governance.

This study offers policy-makers additional evidence to be used for setting up and/or enacting regulations in Saudi Arabia.