THE EFFECT OF BOARD & AUDIT COMMITTEE CHARACTERISTICS ON BANK PERFORMANCE IN BANGLADESH

Abstract

By investigating the effects of board and audit committee characteristics—such as size, experience, diversity, and independence—on the financial performance of Dhaka Stock Exchange listed banks, this study contributes to academic literature in Bangladesh's banking industry. Examining the connection between these traits and the banks' financial performance is the motivation of the study. The study found no significant issues with neither multicollinearity, normality, nor autocorrelation using a multiple panel Ordinary Least Square (OLS) regression model on 120 firm years of panel data from sample banks' annual reports and conducted diagnostic tests beforehand. The stakeholder theory is supported by the results, which show that audit committee independence has a significant positive effect on bank performance as proxied by Tobin’s Q. Tobin's Q was not significantly impacted by any other board or audit committee features, and only one hypothesis was supported viz. audit committee independence by the lack of significant effects on bank performance also proxied by net income before taxes. The paper suggests that independent audit committees be given special emphasis by Bangladeshi regulatory bodies. By boosting public trust in the financial sector, these committees shield creditors and depositors, discourage opportunistic financial reporting, and facilitate good governance banking practices in Bangladesh.