Audit committee effectiveness in times of crisis: Empirical insights on key audit matters disclosure

Abstract

This study investigates the relationship between audit committee (AC) effectiveness and key audit matter (KAM) disclosure in non-financial listed companies in GCC countries with COVID-19 as a moderator. This study used a static and dynamic panel regression model with 2238 observations from 2017 to 2022. We found a negative relationship between the AC effectiveness index and KAM disclosure. However, the negative relationship between AC effectiveness and KAM disclosure is reduced by COVID-19, thus AC effectiveness decreased during the COVID-19 pandemic. Additional analysis shows that large companies with AC effectiveness disclose less KAM than small companies. Also, dynamic regression using two-step GMM results conforms to the main findings. This study is important for developing corporate governance strategies that will build stakeholders’ trust and informed financial decision-making in this context. Moreover, it provides new evidence on the effectiveness of AC and KAM disclosure during a crisis and highlights the challenges and opportunities in emerging markets in GCC countries.