Exploring the Dynamic Influence of Board Diversity and Audit Practices on Firm Performance: A Study of Commercial Banks in Bangladesh

Authors

  • Shadia Sharmin Department of Business Administration, University of Scholars, Dhaka, Bangladesh
  • Abdullah Al Rakib Department of Business Administration, University of Scholars, Dhaka, Bangladesh
  • A.T.M. Fahimul Islam Department of Business Administration, University of Scholars, Dhaka, Bangladesh
  • Fahanaz Luna Department of Business Administration, Fareast International University, Dhaka, Bangladesh

Keywords:

Board Diversity, Audit Practices, Firm Performance, Commercial Banks, Bangladesh, Stewardship Theory

Abstract

This study evaluates the connection between corporate financial success, quality audit, and board diversity and draws from agency and stewardship theories. While agency theory suggests managers prioritize personal welfare over shareholder interests, stewardship theory asserts managers are reliable and trustworthy. The study finds mixed implications of board diversity on firm performance. Gender diversity, particularly female board representation, positively impacts financial performance, yet nationality diversity correlates negatively due to cross-cultural communication barriers. Quality audits, indicated by higher audit costs, enhance financial performance through a comprehensive investigation. Thus, diversified boards and quality audits are crucial for market share, management adequacy, and improved financial metrics (ROA and ROE). Recommendations advocate genuine consideration of diversity in board composition and quality audit arrangements across sectors to bolster firm performance.

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Published

2023-11-22

How to Cite

Sharmin, S., Al Rakib, A., Islam, A. F., & Luna, F. (2023). Exploring the Dynamic Influence of Board Diversity and Audit Practices on Firm Performance: A Study of Commercial Banks in Bangladesh. Asian Accounting and Auditing Advancement, 14(1), 43–50. Retrieved from https://4ajournal.com/article/view/85

Issue

Vol. 14 No. 1 (2023): January - December

Section

Articles

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