Do Audit Committee Characteristics Influence Audit Committee Meetings? Moderating Role of CEO Duality

Abstract

This study investigates the impact of audit committee (AC) characteristics which influence the number of AC meetings. Further, the moderating role of CEO duality in this association is also investigated. This article is a contribution to SDG 8, decent work and economic growth for everyone, which aligns with the sustainable economic growth. Panel data analysis is employed to analyse the impact of AC characteristics on AC meetings and to examine the moderating role of CEO duality in this association. The sample for the analysis comprises 481 companies, and a balanced panel of 7,696 firm-year observations is formed. The study provides empirical evidence that the number of AC meetings is negatively influenced by the number of years of auditor employment, whereas the size, number of independent directors and attendance of members in AC meetings positively impact the number of AC meetings. The study also finds that CEO duality plays a significant negative role, and this finding supports the argument of Fama and Jensen (1983, The Journal of Law and Economics, 26, 301–325) that the presence of CEO duality signals the absence of the separation between decision control and decision management. The association of select AC characteristics affecting the AC activities would help in quantifying the diligence measurement.

Keywords

Corporate governance audit committee emerging economies audit committee meetings CEO duality

Introduction

Prior studies have documented that the presence of an effective audit committee (AC) corroborates the presence of transparent and reliable financial reporting, control and risk management mechanisms in a firm (Yin et al., 2012) and reduces agency problems (Abdelhak et al., 2023; Omair Alotaibi & Hussainey, 2016). Firms may enhance the internal governance mechanism and bring more transparency, and a way to bring a change in both is an effective AC (Alzeban, 2019; Carcello & Neal, 2000). An emerging economy study (Muravyev, 2025) identified a positive association between board monitoring and the depth of corporate disclosures. The author also investigated moderating roles of internal governance and institutional environment and concluded that a strong internal governance strengthens the relationship further. This underlines the crucial role of the AC, which is the vigilant internal body in an organization, and its audit quality further strengthens trust in the organization. This is true for both external and internal stakeholders and shareholders. An effective AC protects the shareholders’ interests and supports in maximizing the firm’s value (DeZoort et al., 2002). A diligent AC minimizes the possibility of internal financial frauds (Pucheta‐Martínez & De Fuentes, 2007). Carcello et al. (2002) measured diligence as the attentiveness of committee members during meetings, preparedness for meetings and participation during meetings, to name a few factors. Such factors are difficult to measure. Quantifying the diligence of AC is difficult as there are many factors for measuring diligence. Many studies have adopted the number of AC meetings as a proxy to measure the diligence of AC (DeZoort et al., 2002; Greco, 2011; Yin et al., 2012). The number of AC meetings has been considered as a variable to measure the monitoring activity (Laksmana, 2008; Sharma et al., 2009).

Various corporate governance (CG) codes have also suggested the number of AC meetings as an important parameter. Big consulting firms like KPMG (1999) proposed a minimum of three to four meetings, whereas Price Waterhouse Coopers (PwC, 1993) recommended four audit meetings in a year. An AC that holds more meetings provides a strong oversight of financial matters by discussing complex matters, thus improving the quality of the information environment (Gebrayel et al., 2018).

While there have been studies to capture AC diligence, it is also imperative to understand whether AC diligence or the number of AC meetings has had any impact on firms’ performance or value. There have been various studies which have given contrasting results while linking the number of AC meetings with the firms’ performance. For instance, Fariha et al. (2022) observed no significant relationship between AC meetings and firms’ performance. This study was conducted on commercial banks listed on Dhaka Stock Exchange. Similar results were observed between the two in other studies (Altin, 2024; Barka & Legendre, 2017). Another study by Alzeban (2020) tried to establish if AC meetings mediate the relationship between internal audit and firm performance and found no such significant association.

On the other hand, Al Farooque et al. (2020) observed a significant explanatory impact of AC meetings on market-based firms’ performance. Shrivastav (2022), who studied 178 Indian companies for a period of 8 years, also found a positive and significant association between the number of AC meetings and Tobin’s Q, which is a market-based firms’ performance indicator. Likewise, Al-Okaily and Naueihad (2020) also observed a significant association between AC meetings and non-family firms’ performance.

In totality, there are mixed observations when we associate AC meetings with firms’ performance.

Indian Context

Due to different governance structures, country sizes and specific regulations applicable to Indian firms, prior study results cannot be generalized in the Indian context (Singhania & Panda, 2025). Further, SEBI has made amendments in AC characteristics, which makes this study relevant and needed. This study is an attempt to investigate the determinants of the number of AC meetings in the Indian context. Though there are studies which have examined the factors affecting the number of AC meetings, these have been conducted in developed economies (Al‐Najjar, 2011; Greco, 2011). India is one of the fastest-growing emerging nations and is making every possible effort to strengthen the CG regime. India represents the common governance challenges of various emerging economies, which include weaker regulatory enforcement, issues in litigation, the urge to meet international standards and the need for professional audit expertise. Culturally and regionally, India also represents the diversity in Asian economies when it comes to examining good CG. This study, therefore, provides a base to understand the significant contributors of AC diligence in such emerging regions. In India, institutional framework related to ACs and their meetings is provided by a statutory body. The Companies Act, 2013, provides the regulations for composition, function, meetings and powers related to ACs in India. The Securities and Exchange Board of India (SEBI) has also issued specific requirements for listed firms, on AC. Further, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have also provided provisions for AC composition and functions in the listing agreement. Regulatory bodies continue to enhance the effectiveness of AC by incorporating new provisions from time to time.

While prior research has examined the determinants of meeting frequency in developed economies (Al-Najjar, 2011; Greco, 2011), India exemplifies governance challenges common across emerging markets: enforcement limitations, litigation constraints, pressures to align with international standards and requirements for professional expertise. Culturally and regionally, India represents Asian economic diversity in governance practices, providing a foundation for understanding the drivers of audit committee (AC) diligence in similar emerging contexts. India has witnessed multiple governance failures exposing significant oversight deficiencies. The Satyam Computer Services scandal (2009) involved financial statement falsification totalling $1.47b, revealing critical failures in board supervision, AC functioning and the effects of CEO duality on governance mechanisms (Narayanaswamy et al., 2015). The Kingfisher Airlines collapse (2012) demonstrated how fund misappropriation, concealed related-party transactions and inadequate board oversight precipitate organizational failure. Such repeated governance breakdowns prompted substantial regulatory response through the Companies Act, 2013, which strengthened AC composition, roles and responsibilities. Further, the Infrastructure Leasing and Financial Services crisis (2018) exposed continued systemic vulnerabilities, with massive debt defaults triggering financial sector liquidity pressures and revealing AC failures to identify escalating obligations despite existing governance frameworks (Kukreja et al., 2021). Similarly, the Punjab National Bank fraud (2018), involving fraudulent credit instruments, highlighted persistent internal control, audit process and supervisory weaknesses (Khalique & Srivastava, 2024). An analysis by the Hindu Business Line (January 2022) revealed that among India’s top 500 corporations, 31% maintained combined chairperson–CEO positions, with an additional 17% featuring related individuals in these roles—indicating approximately 48% non-compliance with SEBI’s role separation mandate. These developments necessitate the empirical assessment of whether regulatory reforms enhanced AC diligence and oversight intensity, including the CEO duality’s moderating influence. It is interesting to find, therefore, whether the monitoring/diligence of AC has improved after implementing the Companies Act 2013 and find answers to the following research questions.

What are the audit characteristics affecting the number of AC meetings in the Indian corporate context?

Does CEO duality moderate the association of audit characteristics and the number of AC meetings?

Is assessing the regulatory changes introduced in the Companies Act, 2013, impacting the number of AC meetings?

The study findings will contribute to the growing literature in CG and AC dynamics with special reference to AC meetings. An effective AC ensures transparency and provides reliable financial reporting (Yin et al., 2012).

The study is structured as follows: the second section provides the institutional setting and reviews the relevant guidelines regarding the formation of AC. The third section explains the research methodology adopted, including data collection and analysis techniques employed. The fourth section discusses the literature review. The fifth section presents the results and their analysis and discusses the implications. The sixth section explains the robustness checks. The seventh section concludes the study with discussions on areas for future research.

Institutional Background

As a nation committed to sustainable growth, India has been taking a series of measures and has brought many new developments in CG and internal control mechanisms. In April 1998, the Confederation of Indian Industry introduced voluntary Codes of CG for listed companies (Bhasin & Shaikh, 2012). Later, as per the suggestions of the Kumar Mangalam Birla Committee, Clause 49 was introduced by SEBI to strengthen CG, a part of the listing agreement. This clause has the provision that companies should have an AC, and a minimum of one director of AC should be financially literate. Another provision states that an independent director should be the chairman of this committee. Subsequently, in 2003, SEBI formed another committee named the Narayana Murthy Committee, which raised important points regarding the responsibilities of the AC, auditor reports, independent directors, risk management and financial disclosures, etc. (Ashfaq & Rui, 2019). Several Indian institutions and professional bodies time to time also actively shape CG and AC norms. The Institute of Company Secretaries of India issued (2015) secretarial standards (SS-1 & SS-2) on board meetings, AC meetings and governance processes. The Institute of Chartered Accountants of India proposed and adopted auditing standards (2002), which aligned with more internal controls and the international norms. The NSE and the BSE also regularly monitor the norms related to boards and audit committees for all listed companies. The Institute of Cost Accountants of India (ICMAI) also strengthened cost audit standards between 2011 and 2014 to improve internal control systems.

Then, in 2009, one of the biggest accounting scandals in ‘Satyam Computer Services’ was identified, necessitating robust CG mechanisms. Therefore, in 2013, the Companies Act 2013 was passed, and considering the recommendations of the Narayana Murthy Committee, amendments in Clause 49 were also brought in.

Despite these norms, many corporate frauds occurred after 2015, leading to weak CG and AC oversight. These crises include the IL&FS crisis (2018), which revealed that the AC failed to assess the systemic risk. The DHFL fraud (2019) revealed weak AC scrutiny of loan books. Yes Bank governance failure (2020) revealed poor risk governance and credit oversight. Despite these norms and guidelines, many corporate frauds occurred, which is one of the motives of this study to further investigate AC characteristics, their influence on AC meetings and the moderating role of CEO duality. A few significant amendments include broadening the role of AC and independent directors to assess the effectiveness of various tools of managing risk and internal control mechanisms.

Literature Review

There have been various studies which have explored the significant variables that account for AC diligence. One study (Raghunandan & Rama, 2007) identified the firm-level characteristics which could define the number of ACM and hence AC diligence and found that firm size, outsider block holdings, the number of board meetings and the nature of the firm do have an impact on AC diligence. Also, they observed the AC size positively impacts ACM. Also, the number of accounting experts in AC also significantly impacted the ACM. Braswell et al. (2012) also studied different variables such as ACM, AC tenure, AC financial expertise, AC size, board size (BS), board independence, board meeting frequency and various other firm-level variables to establish AC diligence. Biswas et al. (2023) also studied AC independence and ACM. The current study has considered select AC characteristics suggested by the past literature to assess their joint impact on AC diligence.

AC Meetings and Auditor Tenure

The literature has provided limited evidence, where the association between the number of years of employment of auditors and the frequency of AC meetings was examined. Kalelkar (2016) conducted a study to check if the firms increase their auditor monitoring in the first year of appointment of auditor and observed that the number of AC meetings were higher in the initial year, which in turn has significantly contributed to better reporting quality. Another study by Knechel and Vanstraelen (2007) found there was not much change in the audit quality with a long-term tenure of auditors, whereas Garcia-Blandon et al. (2020) found a positive association of auditors’ tenure and audit quality even when the association crossed over 10 years. On a similar note, Kamarudin et al. (2022) in their comprehensive study, considering samples from 36 countries for 16 years, investigated if the auditor’s tenure could significantly influence the accounting quality, found a positive association. A longer tenure therefore has emerged as having higher association with audit quality and may in turn could support a higher frequency of AC meetings as better auditing also means strong AC diligence. Jadiyappa et al. (2021), however, in their study on Indian firms before the implementation of mandatory rotation under Companies Act 2013 found mixed results. In general, they observed a positive association between the auditor’s longer tenure and audit quality. However, results were negative in specific conditions, where auditors were paid exceptionally high compensation and more specifically if the firm was a part of a business group or where the case of CEO duality was present. A vast number of other studies covered other characteristics and structures of ACs; however, the years of employment of auditors impacting AC diligence and hence the number of AC meetings have been given limited attention. Yin et al. (2012) investigated factors such as board characteristics, ownership structure and firms’ financial attributes that affect the frequency of AC meetings. Shafie et al. (2009) in their study in Malaysia found a positive and significant relationship between audit firm tenure and reporting quality. A good reporting indicates AC diligence; hence, it paves the way for research and empirically investigates if the auditor’s tenure will have an impact on AC diligence represented by the number of AC meetings.

A few studies advocate that the rotation of audit partners will continuously improve audit quality. However, a study conducted on Indian firms (Mohapatra et al., 2021) to test if the rotation had significantly contributed to audit quality found no such strong evidence.

All these studies have examined one or the other aspect of AC reporting quality, or determinants of audit AC meetings. However, due to lack of sufficient literature, the relationship between the significant impact of years of employment of auditors and the number of AC meetings needs to be diagnosed, and hence, we propose the following hypothesis.

H₁: Auditor tenure is positively associated with the number of AC meetings.

AC Meetings and Independent Directors on the AC

The agency theory posits that a higher proportion of independent directors on the board is expected to improve the ability of the committee to deal with agency problems. Independent directors also play the role of arbitrators in the case of a disagreement between management and outsiders (Fama & Jensen, 1983). There is a lesser probability of independent directors being manipulated by managers, and therefore, they are effective in controlling the management.

Lam (2000) proposed that the perception of the independence of a committee reinforces the independence of auditors and motivates management and auditors to disclose financial information with greater objectivity. As a result, independent directors are more inclined than non-independent directors to refrain from taking any acts that would damage their reputation (Abbott et al., 2004; Abbott & Parker, 2000; Hussain & Mallin, 2003). Beasley (1996) found that the percentage of independent external directors was much lower in corporations engaged in financial statement fraud as compared to other organizations.

According to Raghunandan and Rama (2007), there exists a positive relationship between the frequency of AC meetings and board independence, to the degree that the former represents a company’s dedication to robust CG. On the contrary, according to Sharma et al. (2009) independent directors, due to their independence from the management, make more objective judgements that require less discussion, which translates into fewer meetings. Yet another study, Biswas et al. (2023), observed a positive as well as a significant relation between board independence and the number of ACMs. Their study was in the context of emerging economies. One study in India (Bansal, 2016) traced the association of AC meetings and auditors’ independence with firms’ performance along with other CG variables and failed to observe any such significant relationship of ACM and auditors’ independence with firms’ performance. So, there are mixed opinions about the association between the number of AC meetings and the percentage of independent directors in the AC and their further contribution to firms’ performance. There have been diverse studies in this regard, and mostly, the results have been found to be conflicting and sometimes insignificant too. For instance, in the United States and other developed nations, namely Portugal, New Zealand (Abbott et al., 2004; Alves, 2014; Bronson et al., 2009; Carcello & Neal, 2000; Vineeta et al., 2009) too, there have been conflicting results. Prior studies show positive association in case of emerging markets (Attia et al., 2025; Biswas et al., 2023; Kallamu & Saat, 2015; Saeed et al., 2022). However, in one study (Bansal, 2016), no significant associations could be observed in the case of India. So, there are mixed opinions about the association between the number of AC meetings and the percentage of independent directors in the AC. Therefore, this study aims to examine whether there is a significant relationship between independent directors in the AC and the number of ACMs, specifically in the Indian context.

The following hypothesis is proposed:

H₂: The proportion of independent directors in the AC is positively associated with the number of AC meetings.

AC Meetings and Attendance of AC Members

Prior research explains that members with high commitment are expected to meet more often than their counterparts. However, commitment is difficult to measure. DeZoort et al. (2002) suggested that various proxies must be used to measure diligence, as it cannot be measured objectively. Therefore, prior literature suggests that the attendance of members at committee meetings can be considered as a proxy measuring the commitment and diligence of the members. Similarly, Habbash (2010) also supported the argument and explained that the attendance of members at the meetings could be taken as a proxy of the diligence and performance of the members. However, there is a limitation of such studies that investigated this association.

So, this study considers the percentage of attendance of AC members at the meetings held in a year. Therefore, the following hypothesis is proposed:

H₃: The attendance of AC members is positively associated with the number of AC meetings.

AC Meetings and the Size of AC

Prior literature shows mixed results for the number of AC meetings and the size of AC. Vinten and Lee (1993) in their study explained that a committee must have a sufficient number of members to perform their responsibilities, which will make AC effective in monitoring the activities. The committee must have an ideal size of members to perform effectively (Dalton et al., 1999). This study explains that a committee cannot function effectively if the size of the committee is too small or too large. If the committee size is small, then it may face problems such as lack of diversity, skills and knowledge. On the other hand, lack of participation from all members may become an issue if the committee size is too large. Therefore, the size of the committee formed should be ideal. However, other researchers present different explanations.

DeFondand Francis (2005) explained that larger number of members in the committee may require the board to provide larger resources to enhance the quality of financial reports. This suggests that a large AC size will have more resources in terms of talent, enhancing the monitoring levels. This may reduce the number of meetings due to enhanced monitoring. Bushman et al. (2004) presented a contrary argument that the small size of the committee lacks effective monitoring due to fewer advisors on the committee. So, there are higher chances of having effective governance when the size of the AC is large. Contrary to this, there are studies (Vafeas, 1999) that have explained that a larger size of AC requires a greater number of AC meetings. Findings by Raghunandan and Rama (2007) and Al-Najjar (2011) found a greater number of AC meetings took place when the size of AC was large.

The diverse results interest us to assess the impact of the size of AC on the number of AC meetings. However, we expect a positive association between AC size and ACM in the Indian context. Therefore, the following hypothesis is proposed:

H₄: The size of the AC is positively associated with the number of AC meetings.

AC Meetings and CEO Duality

Forker (1992) explains that combining the roles of CEO and chairman may lead to a threat to the monitoring quality. Supporting this, governance activists discourage CEO duality by explaining that the separation of roles of CEO and chairman reduces agency problems and brings in more independence among directors (Brickley et al., 1997). In the study conducted by Greco (2011), it was hypothesized that CEO duality and the number of AC meetings have a negative association. Jafeel et al. (2024) in their studies on GCC nations, while creating a comprehensive Internal Governance Quality Index, considered a negative impact of CEO duality on firms’ performance, decision-making and agency cost, finally leading to ineffective investment decisions. All these studies and even the agency theory suggest a negative association of CEO duality (Puni & Anlesinya, 2020) on the diligence process. There are possibilities that even if the AC characteristics (size, tenure, independence, attendance) are strong, their impact on strong AC diligence in terms of ACM may get adversely affected or muted if the CEO chairs the board. The literature considering the moderating role of CEO duality in this relationship is scarce and hence posits a need to assess if CEO duality has a significant moderating effect.

Hence, we hypothesize that CEO duality negatively moderates the impact of audit characteristics and the number of AC meetings.

H₅: CEO duality negatively moderates the impact of AC characteristics and the number of AC meetings.

Research Design

The initial sample included all companies that furnished the AC’s details listed on the NSE of India from 2008 to 2023. The year 2008 has a special significance as after the global financial crisis, regulatory bodies were more vigilant and stringent concerning CG and AC standards. Out of 2,360 publicly listed companies in the NSE of India, companies related to the banking and financial sector and companies with missing information were removed, following the study of Raithathaand Haldar (2021). The final sample comprises 481 companies and a balanced panel of 7,696 firm-year observations. These companies had continuous data throughout the sample period. These companies were from various sectors such as healthcare, IT, real estate, FMCG, automobile, energy, materials, utilities, agriculture, aviation, alcohol and chemical. The financial and AC data were collected using the Bloomberg database and the CMIE Prowess IQ databases.

To assess the influence on the number of ACMs, Equation 1 is employed, wherein AC characteristics, board characteristics and firms’ financial characteristics are considered.

\begin{array}{l} A C M_{i ​, t} = β_{o} + β_{1} {(A C)}_{i ​, t} + β_{2} B S_{i ​, t} + β_{3} W B_{i ​, t} + \\ β_{4} C E O D u a l_{i ​, t} + β_{5} I D_{i ​, t} + β_{6} T A + \\ β_{7} M T B_{i ​, t} + β_{8} D E + β_{9} R O A_{i ​, t} + ε_{i ​, t} \end{array}

(1)

Four determinants of AC are explored—YAE, IDAC, ACS and ACA—along with firm-specific characteristics. Refer to the Annexure for nomenclature.

To analyse the moderating effect of CEO duality on the association of AC and ACM, Equation 2 is used:

\begin{array}{l} A C M_{i ​, t} = β_{o} + β_{1} {(A C)}_{i ​, t} + β_{2} C E O D u a l_{i ​, t} + \\ β_{3} A C \times C E O D u a l_{i ​, t} + β_{4} B S_{i ​, t} + \\ β_{5} W B_{i ​, t} + β_{6} C E O D u a l_{i ​, t} + β_{7} I D_{i ​, t} + \\ β_{8} T A + β_{8} M T B_{i ​, t} + β_{9} D E + β_{10} R O A_{i ​, t} + ε_{i ​, t} \end{array}

(2)

Before applying panel data analysis, data are checked for fixed-effect and random-effect regression models using Hausman test. The p value indicates the suitability of employing the fixed-effect model as the value was less than .05. A substantial body of empirical research models have employed OLS-based linear models and the fixed effect model. Seminal and contemporary studies emphasize direction, significance and economic interpretation of governance mechanisms, rather than distribution-driven prediction accuracy.

Fixed-effects models are employed to control for unobserved, time-invariant firm-specific heterogeneity. The fixed-effect approach allows the analysis to focus on within-firm variations over time, thereby reducing omitted-variable bias and yielding more reliable estimates of the impact of AC characteristics and CEO duality.

Control Variables

Board Variables

The model is controlled by BS, women on the board (WB) and independent director (ID). Prior literature has examined the effect of BS on the number of ACMs. There are mixed findings with respect to BS and number of ACMs.

The extant literature has also investigated the impact of BS on the number of AC meetings. The prior literature shows mixed results for BS. BS may increase or decrease the number of ACMs (Raghunandan & Rama, 2007; Sharma et al., 2009), whereas Greco (2011) explained that a larger BS may lead to inefficiency, thereby decreasing the number of ACMs. Contrary to this, Al-Najjar (2011) posited that firms with larger boards must meet more frequently, and therefore, more audit meetings must be conducted. So, the results for BS are mixed with those of the previous literature.

Another board characteristic is the presence of WB, which can modify the corporate decision-making process of a firm (Thiruvadi, 2012). Prior research shows that women are more risk-averse than their male counterparts, and while making decisions, they adopt trust-building and democratic approaches. In India, women’s presence on boards is approximately 19% (Jha & Bharti, 2024). Daily and Dalton (2003) explained that women’s communication style is more participative and process oriented. Therefore, the presence of women directors on the board should positively influence the number of AC meetings.

The last board variable is ID, measured by the percentage of independent directors on the board. Raghunandan and Rama (2007) explained that an independent board showed firms’ commitment to a robust CG mechanism. Contrary to this, Sharma et al. (2009) hypothesized a negative association between independent directors and the number of AC meetings. Previous literature showed mixed results, which leads us to examine the impact of an independent board on the number of AC meetings.

Firm-specific Characteristics

Firm-specific characteristics are total assets (TA), market capitalization to book value (MTB) ratio, debt–equity ratio (DE ratio) and return on assets (ROA). TA is measured by considering the natural log of total assets, which represents the firm’s size. Size is included as a control variable (Bansal & Thenmozhi, 2021), as a larger firm is expected to require more supervision and monitoring due to complex accounting transactions. Therefore, it is expected to have a positive association with the size and number of ACMs (Greco, 2011; Sharma et al., 2009). Another firm-specific variable is leverage, which is measured by the DE ratio. There are mixed opinions about leverage and the number of AC meetings. On the one hand, higher leverage implies more risk. Therefore, AC is expected to be more vigilant and conduct more meetings (Dechow et al., 1996; Raghunandan & Rama, 2007). However, as per the agency theory, higher debt levels minimize agency costs, which may result in fewer meetings (Jensen, 1986). So, we include leverage as a variable but do not predict the direction of the impact of leverage on ACMs. Following Sharma et al. (2009), two more control variables are taken, ROA and MTB, which are proxies for profitability and growth, respectively. Firms performing poorly (with losses or generating low ROA) are more likely to commit accounting errors, which may require more internal monitoring than firms generating higher profits. So, ROA and ACM are expected to have a negative association. The last firm-specific control variable is MTB, which is a proxy for growth. As the firm grows, it is expected that larger monitoring will be required. Therefore, a positive association between MTB and ACMs is expected.

Results and Analysis

Descriptive Statistics of the Variables and Correlation Matrix Among the Variables

Table 1 provides an overview of the descriptive statistics for the variables. The average number of ACMs is 5 per year, which is good, considering the recommendations of KPMG and PwC (2011). The attendance of ACM is more than 90%, which signals sincerity, commitment and diligence among the members. Most of the members in the committee are independent directors, which is reflected in the percentage of independent directors on board (82%). The average BS is approximately 9 members, and most members are male, which is reflected in the percentage of women on the board.

Table 1.

Descriptive Statistics of Research Variables.

Variables	Mean	Median	Standard Deviation
ACM	5.020	4.000	2.141
YAE	5.608	5.000	4.035
IDAC	81.592	75.000	14.682
ACS	3.912	4.000	1.815
ACA	91.151	92.590	108.208
CEODual	0.280	0.000	0.449
BS	9.185	9.000	2.769
WB	10.668	10.000	9.630
ID	55.583	50.000	18.260
TA	148,791.800	26,718.050	548,455.573
MTB	4.132	1.975	13.641
DE	250.997	49.955	3,168.990
ROA	8.775	6.559	13.115

From Table 2, it can be inferred that none of the variables are highly correlated. This depicts the absence of multicollinearity among the variables.

Table 2.

Correlation Matrix.

Variables	YAE	IDAC	ACS	ACA	BS	WB	CEODual	ID	TA	MTB	DE
YAE	1.000
IDAC	−0.040	1.000
ACS	0.026	−0.030	1.000
ACA	0.001	−0.011	−0.019	1.000
BS	−0.063	0.165	0.098	0.003	1.000
WB	0.066	−0.065	0.013	0.012	−0.166	1.000
CEODual	0.018	0.003	−0.008	0.017	0.027	0.019	1.000
ID	0.048	0.264	0.016	0.002	−0.208	0.236	0.029	1.000
TA	0.053	0.057	0.011	0.018	0.209	0.051	0.076	0.022	1.000
MTB	0.010	0.014	0.006	0.002	−0.013	0.041	0.004	−0.007	−0.024	1.000
DE	−0.018	−0.018	0.016	−0.002	0.000	0.016	0.047	−0.002	0.007	0.057	1.000
ROA	−0.004	0.007	−0.037	0.002	−0.045	0.048	−0.006	0.029	−0.050	0.088	−0.016

Regression Results

AC Characteristics and the Number of AC Meetings

Table 3 depicts the results of the impact of audit committee and board characteristics on the number of ACMs.

Table 3.

Fixed-effect Regression Output Depicting the Impact of the Audit Committee on the Number of Audit Committee Meetings.

Variables	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)
YAE	−0.014** (−2.11)
IDAC		0.012*** (5.83)
ACA			0.004** (2.10)
Ln(ACS)				3.019*** (26.03)
LN(BS)	−1.901*** (−15.09)	−2.009*** (−15.79)	−1.883*** (−14.99)	−2.632*** (−21.30)
ID	−0.011*** (−6.92)	−0.015*** (−8.39)	−0.011*** (−6.88)	−0.017*** (−10.79)
WB	−0.003 (−1.18)	−0.001 (−0.59)	−0.003 (−0.95)	−0.003 (−1.25)
LN(TA)	0.139** (3.10)	0.153** (3.43)	0.140*** (3.14)	0.086** (2.01)
MTB	0.003* (1.71)	0.003* (1.81)	0.002* (1.73)	0.002* (1.69)
DE	−0.000** (−2.21)	−0.000** (−2.34)	−0.000** (−2.17)	−0.001*** (−2.67)
ROA	−0.004*** (−2.78)	−0.004*** (−2.74)	−0.004*** (−2.80)	−0.003* (−1.91)
Constant	8.186*** (16.49)	7.416*** (14.64)	8.065*** (16.32)	−6.693*** (−14.07)
Year	Yes	Yes	Yes	Yes
Adjusted R²	0.019	0.0273	0.0202	0.0265

Note: ***, ** and * denote the significance at 1%, 5% and 10% levels, respectively.

In the case of YAE, the coefficient is significant and negative (−0.014), which shows that with the increase in the number of years of auditors employed, the number of ACMs decreases. Auditors joining the firm newly (measured by the number of years the auditor is employed with the firm) conduct more meetings, explaining that new auditors are more vigilant. This supports the arguments presented by Kalelkar (2016).

Regarding the percentage of independent directors on AC, there is a significant positive coefficient (0.012) of IDAC. This shows that a larger percentage of independent directors on AC supports a relatively higher number of ACMs. The results are consistent with the argument of Raghunandan and Rama (2007), which posit that an independent board shows the commitment of firms towards a robust CG. In India, under the Companies Act 2013, independent directors are entrusted with the tasks of mentoring, guiding, managing risk and protecting stakeholders’ interests. The results also support the agency theory, which highlights that a higher proportion of independent directors on the board is expected to improve the ability of the committee while dealing with agency problems.

Regarding ACA, it has a significant and positive impact (0.004) on ACM. Higher attendance is also a measure of diligent AC members. Another variable is ACS, which has a positive (2.899) and significant impact on the number of ACMs. The results are consistent with the findings of Raghunandan and Rama (2007) and Al-Najjar (2011). DeFond and Francis (2005) also explained that the larger size of AC seeks more resources from the board, which improves the quality of financial reports. The reason for such a positive association could be that the small size of the committee lacks effective monitoring due to fewer advisors on the committee. So, there are higher chances of having effective governance when the size of the AC is large. A larger AC size will require more deliberations, and therefore, a greater number of AC meetings will be conducted.

In the case of board characteristics, the first variable is BS. The result shows that BS negatively influences the number of AC meetings. The results are consistent with the explanation given by Greco (2011). A larger board may become a reason for inefficiency, which may negatively impact the number of ACMs. Another variable for board characteristics is the percentage of women on the board, which has a negative association with the number of AC meetings. Women’s representation on boards is only 10% in the sample of Indian firms considered for the study, which means if an average board has 10 members, then 9 are male and 1 is female. One female on a board is just a representation, and therefore, the influence of WB is not significant. Three women on a board is a powerful number that holds significance if the position of power is to be analysed (Carpenter, 2018). Regarding independent directors, the impact is significant and negative on the number of AC meetings. The results support the explanation by Sharma et al. (2009).

Regarding the control variables, size has a significant positive coefficient, showing that larger firms will require more supervision and monitoring due to complex accounting transactions. MTB also has a positive coefficient, which explains that firms that are growing conduct more ACMs. Another firm-specific variable is leverage, which has a significant negative coefficient. This study did not predict the impact as there are mixed results of leverage on ACM. The results obtained in this study show the applicability of the agency theory, which states that leverage implies more risk; therefore, AC is expected to be more vigilant and conduct a greater number of meetings (Dechow et al., 1996; Raghunandan & Rama, 2007). However, as per the agency theory, higher debt levels minimize agency costs, which may result in a fewer number of meetings (Jensen, 1986). The last firm-specific control variable is ROA, which has a significant negative coefficient as per the expectation. Firms performing poorly conduct more ACMs as higher monitoring is required for such companies.

Moderating Role of CEO Duality on the Association of AC Characteristics and the Number of AC Meetings

Table 4 displays the results on how CEO duality moderates the relationship between AC characteristics and the frequency of AC meetings.

Table 4.

Fixed-effect Regression Output Showing the Moderating Role of CEO Duality on the Association of Audit Committee Characteristics and the Number of Audit Committee Meetings.

Variables	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)
YAE	−0.003 (0.40)
IDAC		0.013*** (5.60)
ACA			−0.032*** (−12.18)
Ln(ACS)				3.454*** (25.92)
CEODual	−0.244** (−2.38)	−0.095 (−0.29)	−3.409*** (−13.48)	1.523*** (5.123)
YAE × CEODual	−0.039*** (−3.19)
IDAC × CEODual		−0.004 (−1.11)
ACA × CEODual			0.033*** (12.36)
LN(ACS) × CEODual				−1.443*** (−6.72)
Control: Board characteristics	Yes	Yes	Yes	Yes
Control: Firm effect	Yes	Yes	Yes	Yes
Year	Yes	Yes	Yes	Yes
Adjusted R²	0.016	0.026	0.036	0.0291

Note: *** and ** denote the significance at 1% and 5% level respectively.

CEO duality significantly negatively moderates the impact of YAE (−0.043) and ACS (−1.574). In the case of ACA, the moderating role of CEO duality is positive and significant. Except for ACA, the coefficient of interaction effect is negative, which explains that in firms where the CEO also holds the chairmanship of the company, the impact of ACS and IDAC is negatively associated with the number of ACMs. The results are consistent with Raghunandan and Rama (2007), where it is found that CEO duality negatively impacts the number of ACMs, though the impact is not significant. The reason for such a negative moderating role can be attributed to two reasons: (a) the CEO duality role poses a threat to the monitoring quality (Forker, 1992); (b) in the case of CEO duality, the CEO may make decisions that favour personal interests, showing ineffective execution of authority in matters where personal interests may affect significantly.

The coefficient on the interaction term Ln(ACS) × CEO duality is negative and statistically significant, indicating that the association between audit committee size and audit committee meeting frequency is weaker in firms characterized by CEO duality. Specifically, while an increase in AC size is generally associated with a higher number of AC meetings, this positive relationship is attenuated when the CEO simultaneously holds the position of board chair. The negative interaction effect suggests that the presence of CEO duality constrains the monitoring effectiveness of larger ACs, limiting their propensity to convene more frequently. While CEO duality weakens the effectiveness of structural governance mechanisms such as AC size, it amplifies the role of behavioural governance mechanisms such as AC attendance. High attendance mitigates the adverse governance effects of CEO duality by enhancing monitoring intensity, as reflected in more frequent AC meetings.

Impact of Regulatory Changes on the Number of AC Meetings

The introduction of the Companies Act 2013 is taken as a proxy for regulatory changes. It is considered a dummy variable, where 1 is taken for years after the applicability of the Companies Act 2013. The introduction of the Act brought various reforms to make CG robust, and major amendments were made, which include broadening the role of AC and independent directors to assess the effectiveness of various risk management tools and internal control mechanisms. Tables 5 and 6 present the results, which are in line with the main results. However, the adjusted R² has improved a little. These results explain that the implementation of the Companies Act 2013 could bring some strength to the CG regime.

Table 5.

Fixed-effect Regression Model Controlling for Regulatory Changes.

Variables	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)
YAE	−0.014** (−2.11)
IDAC		0.012*** (5.83)
ACA			0.000** (2.10)
Ln(ACS)				3.019*** (26.03)
Control: Companies Act dummy	Yes	Yes	Yes	Yes
Control: Board characteristics	Yes	Yes	Yes	Yes
Control: Firm effect	Yes	Yes	Yes	Yes
Year	Yes	Yes	Yes	Yes
Adjusted R²	0.019	0.0273	0.020	0.0265

Note: *** and ** denote the significance at 1% and 5% level respectively.

Table 6.

Fixed-effect Regression Model Controlling for Regulatory Changes and Moderating Effect of CEO Duality.

Variables	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)
YAE × CEODual	−0.039*** (−3.19)
IDAC × CEODual		−0.004 (−1.11)
ACA × CEODual			−0.032*** (−12.18)
Ln(ACS) × CEODual				−1.443*** (−6.72)
Control: Companies Act dummy	Yes	Yes	Yes	Yes
Control: Board characteristics	Yes	Yes	Yes	Yes
Control: Firm effect	Yes	Yes	Yes	Yes
Year	Yes	Yes	Yes	Yes
Adjusted R²	0.016	0.026	0.036	0.029

Note: *** denote the significance at 1% level.

Robustness Checks

Panel-corrected Standard Error Output Showing the Impact of AC Characteristics on ACM

Following Beck and Katz (1995), we employ panel-corrected standard errors to account for heteroskedasticity and contemporaneous correlation across panels. This approach ensures consistent inference in the presence of cross-sectional dependence and serial correlation, which are common in firm-level panel data.

Table 7 presents the results of the panel-corrected standard error, showing the impact of AC on ACM.

Table 7.

Panel-corrected Standard Error Output Showing the Impact of AC on ACM.

Variables	Coefficient (z value)	Coefficient (z value)	Coefficient (z value)	Coefficient (z value)
YAE	−0.009** (−1.92)
IDAC		0.008*** (3.12)
ACA			0.001* (1.81)
Ln(ACS)				1.326*** (3.43)
LN(BS)	−0.551** (−2.41)	−0.622** (−2.58)	−0.538** (−2.36)	−0.813*** (−2.88)
ID	−0.003 (−1.48)	−0.005** (−2.11)	−0.003 (−1.44)	−0.005** (−2.51)
WB	−0.006** (−1.97)	−0.004 (−1.54)	−0.005* (−1.76)	−0.006** (−2.00)
LN(TA)	0.452*** (15.94)	0.448*** (15.80)	0.451*** (15.73)	0.449*** (15.57)
MTB	0.004*** (3.13)	0.004*** (2.94)	0.004*** (3.14)	0.004*** (2.77)
DE	−0.001 (−0.36)	−0.001 (−0.24)	−0.001 (−0.30)	−0.001 (0.869)
ROA	−0.003* (−1.86)	−0.003** (−1.95)	−0.003** (−1.91)	−0.002* (−1.83)
Constant	−50.533*** (−2.95)	−49.545*** (−2.65)	−43.030** (−2.51)	−37.711** (−2.05)
Year	Yes	Yes	Yes	Yes
Adjusted R²	0.121	0.124	0.121	0.140
Wald χ²	610.08	592.88	596.26	620.39

Note: ***, ** and * denote the significance at 1%, 5% and 10% levels, respectively.

The results are the same as obtained in the main analysis. Three variables, IDAC, ACA and ACS, significantly and positively impact the number of AC meetings, whereas YAE negatively affects the number of AC meetings. This validates the main findings.

Panel-Corrected Standard Error Output Showing Moderating Role of CEO Duality

Table 8 presents the results of panel-corrected standard errors showing the moderating role of CEO duality in the impact of audit characteristics on the number of AC meetings.

Table 8.

Panel-corrected Standard Error Output Showing the Moderating Role of CEO Duality.

Variables	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)
YAE	−0.003 (−0.48)
IDAC		0.009*** (3.85)
ACA			−0.023*** (−4.25)
Ln(ACS)				1.663*** (3.45)
CEODual	0.079 (0.66)	0.383 (0.87)	−2.132*** (−4.27)	1.560*** (2.60)
YAE × CEODual	−0.022 (−1.12)
IDAC × CEODual		−0.005 (−0.92)
ACA × CEODual			0.023*** (4.35)
LN(ACS) × CEODual				−1.205*** (−2.69)
LN(BS)	−0.554** (−2.42)	−0.624** (−2.59)	−0.552** (−2.47)	−0.778*** (−2.87)
ID	−0.003 (−1.44)	−0.005** (−2.11)	−0.003 (−1.56)	−0.005** (−2.49)
WB	−0.005* (−1.89)	−0.004 (−1.51)	−0.003 (−1.10)	−0.005** (−1.88)
LN(TA)	0.453*** (16.15)	0.448*** (15.92)	0.452*** (15.59)	0.445*** (16.58)
MTB	0.004*** (3.11)	0.004*** (2.95)	0.004*** (3.24)	0.003** (2.58)
DE	−0.001 (−0.38)	−0.001 (−0.24)	−0.001 (−0.35)	−0.001 (−0.23)
ROA	−0.003* (−1.87)	−0.003** (−1.97)	−0.003** (−2.06)	−0.003* (−1.92)
Constant	−49.805*** (−2.98)	−48.597*** (−2.64)	−50.229*** (−2.69)	−35.250** (−2.02)
Year	Yes	Yes	Yes	Yes
Adjusted R²	0.122	0.124	0.131	0.144
Wald χ²	1,147.02	1,303.11	796.42	1,001.89

Note: ***, ** and * denote the significance at 1%, 5% and 10% levels, respectively.

Another way adopted to check the robustness is by modifying WB, which is one of the control variables. WB is considered as a binary variable if the percentage of women representation is more than 30% on board; else it is zero. Table 9 shows the results for this.

Table 9 presents the finding by modifying the WB variable to validate the finding. WB is considered as a binary variable if the percentage of women representation is more than 30% on board; else it is zero. After considering WB-dummy as one of the control variables, results still remain consistent with the main results.

Table 9.

Fixed-effect Regression Results Showing the Impact of AC on the ACM-dummy of Women on Board.

Variables	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)	Coefficient (t-value)
YAE	−0.014** (−2.08)
IDAC		0.012*** (5.81)
ACA			0.000** (2.09)
Ln(ACS)				3.013*** (25.97)
LN(BS)	−1.914*** (−15.20)	−2.025*** (−15.90)	−1.898*** (−15.10)	−2.634*** (−21.32)
ID	−0.011*** (−7.04)	−0.014*** (−8.46)	−0.011*** (−6.97)	−0.017*** (−11.02)
WB-dummy	−0.257** (−2.14)	−0.222* (−1.85)	−0.247** (−2.06)	−0.1666 (−1.45)
LN(TA)	0.135*** (3.02)	0.150*** (3.36)	0.137*** (3.06)	0.084* (1.95)
MTB	0.002* (1.73)	0.003* (1.82)	0.002* (1.74)	0.002* (1.71)
DE	−0.000** (−2.22)	−0.000** (−2.37)	−0.000** (−2.19)	−0.000*** (−2.66)
ROA	−0.004*** (−2.79)	−0.004*** (−2.75)	−0.004*** (−2.81)	−0.003* (−1.92)
Constant	8.232*** (16.56)	7.472*** (14.74)	8.116*** (16.40)	−6.715*** (−14.10)
Year	Yes	Yes	Yes	Yes
Adjusted R²	0.018	0.025	0.018	0.025

Note: ***, ** and * denote the significance at 1%, 5% and 10% levels, respectively.

Conclusion

This study seeks to identify the determinants that influence the frequency of ACM. To assess the impact of these meetings, firms listed on the NSE were analysed. A balanced panel data set comprising 481 Indian firms over 15 years (2008–2023) was used, resulting in 7,696 firm-year observations.

The study finds that the number of ACMs is negatively associated with the number of years the auditor is employed. This shows that if the association of an auditor is longer with a firm, then it negatively affects the number of AC meetings. The results are not fully aligned with prior studies, which suggest that longer CEO tenure should lead to better investment decisions due to greater experience, firm-specific knowledge, and strategic understanding; the results extend a caution to ensure sufficient rationalization of the decision of longer auditors’ tenure, especially in the case of emerging economies. Hence, till the time the systems in emerging economies mature, policymakers may like to consider policies which examine the auditors’ tenure with a pinch of salt. Accordingly, our results do not argue against longer auditor tenure per se, but caution against assuming its uniformly positive effect across institutional contexts. Policymakers and regulators may therefore consider complementing tenure norms with stronger safeguards on AC independence and periodic performance reviews of auditors.

The results also show that ACS positively impacts the number of AC meetings. The study also reported a positive association between independent directors on AC and the number of AC meetings, consistent with the results of Biswas et al. (2023). The study supports the argument that higher AC independence leads to effective monitoring and is associated with more effective monitoring of financial reporting (Bradbury et al., 2006). The study finds that CEO duality plays a significant negative role, and this finding supports the argument of Fama and Jensen (1983) that the presence of CEO duality indicates a lack of separation between decision-making control and management functions. This may act as a hindrance to the transparent and fair functioning of the business.

The study contributes to the literature in two ways. First, it is conducted in one of the fastest-growing emerging economies, India. Previously, the studies were based on developed economies; this study focuses on an emerging economy. Such economies are still in the evolving phase, and the governance regimes need a lot of attention. After the implementation of the Companies Act 2013, transparency and reporting frameworks have improved. In India, regulatory bodies have introduced several reforms to strengthen and create a robust CG regime. The findings of the study can contribute to creating a framework for internal AC. Policymakers can use the study findings to see the characteristics impacting the number of AC meetings, which is a measure of diligence, and in the future, policy formation can be done that will safeguard various stakeholders of the firm. Second, the study also shows that CEO duality moderates the relationship between audit characteristics and AC meetings. This finding has important implications for policymakers and regulatory bodies. Global investors who have a special interest in emerging economies can refer to the outcomes of the study to understand the diligence of AC. Investors and regulatory bodies may exert pressure on companies to prefer different people officiating the CEO and chairperson roles and regulate frequent rotation in the AC, which in turn will contribute towards better AC diligence, thereby improving trust among investors and other stakeholders. This is even more true for emerging economies like India, where despite strict rules related to the composition of AC, the policy is silent on issues such as CEO duality and years of employment of auditors. Third, in emerging economies, where ownership concentration and informal governance mechanisms are more prevalent, extended auditor tenure may inadvertently weaken committee vigilance rather than enhance efficiency.

Scope for Further Studies

Although the findings are robust and validated, there are a few limitations of the study. It does not consider all factors affecting the number of AC meetings. It also does not account for the length of the meetings conducted due to the non-availability of data. Another factor that is not considered is the agenda/topic of the meeting. Therefore, there is room for further research, which will enrich the understanding of the factors affecting the number of AC meetings. A qualitative study is also proposed here to analyse the discussions in AC meetings. SEBI in India has made it mandatory for AC members to be capable of understanding and analysing financial documents. An in-depth study in this line is also required as, despite the rule, financial frauds still happen. Future studies can also conduct exclusive research on financial firms, particularly in India or in other emerging markets that are growing at a faster rate and attract a lot of global investors. Financial firms significantly contribute to economic growth; therefore, the impact of internal audit characteristics on the number of AC meetings can be further explored in this aspect. Lastly, other measures of audit quality could be assessed, such as audit fees and Big 4 auditors.

Footnotes

Data Availability Statement

Secondary data have been used for the study, which have been taken from CMIE Prowess and Bloomberg. The data that support the findings of this study are available from the corresponding author, Ketan Mulchandani, upon reasonable request.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

Annexure

Variable Nomenclature

ACM	No. of AC meetings
YAE	Years auditor employed
IDAC	% independent directors on AC
ACS	Size of AC
ACA	% AC meeting attendance
BS	Board size
WB	% Women on board
CEODual	CEO duality (Yes = 1; No = 0)
ID	% independent directors
TA	Total assets
MTB	Market capitalization to book value
DE	Total debt to total equity
ROA	Return on assets

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