Title: Audit committee member characteristics and committee effectiveness: evidence from Turkish banking sector

Authors: Yaman Erzurumlu; Gurcan Avci

Addresses: Department of Engineering Management, Faculty of Engineering and Natural Sciences, Bahcesehir University, Istanbul, 34558, Turkey ' FinaHukuk Regulation Services, Istanbul, 34782, Turkey

Abstract: Lack of corporate governance was addressed as one of the reasons for financial scandals and crises experienced during the 2000s. Financial crises were followed by audit committee mechanism revision, and focus shifted onto how audit committees' governance quality could be improved. Using a unique data set, this study investigates the impact of audit committee membership characteristics on the governing quality of the audit committee measured by operational loss in the Turkish banking sector. Results imply that gender diversification and multiple directorships of the members improve the governance effectiveness while auditing background alone does not make significant improvement after controlling for industry experience. Differences in cultural background and insufficient funding of the committee could be detrimental to the effectiveness of banks' audit committees at mitigating operational risk. Trends of the member characteristics for 2006-2012 suggest that the 2008 turbulence has mainly had a disciplinary effect on effective audit committees.

Keywords: audit committee; audit committee membership; operational risk; operational loss; corporate governance; banks; Turkey; LSDVC.

DOI: 10.1504/IJMEF.2020.109996

International Journal of Monetary Economics and Finance, 2020 Vol.13 No.4, pp.341 - 361

Received: 05 May 2019
Accepted: 29 Mar 2020
Published online: 30 Sep 2020 *

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