Audit Committee Effectiveness, Internal Audit Quality, Financial Reporting Quality, and Organizational Success: An Empirical Investigation of Thai Listed Firms

This study aims at investigating the influences of audit committee effectiveness on organizational success of Thai listed firms through mediating effects of internal audit quality and financial reporting quality. A questionnaire survey was distributed to the in-house internal audit function in approximately 589 listed firms in Thailand In this study, only 186 listed firms in Thailand are the samples of the study. Auditing executives of the listed firms are the key informants of the study. Both structural equation model and multiple regression analysis are applied to test the research relationships. The findings show that audit committee' effectiveness is significantly and positively related to internal audit quality, financial reporting quality, and organizational success. In addition, internal audit quality has an importantly positive effect on financial reporting quality and organizational success while financial reporting quality has a potential positive impact on organizational success. Empirically, both internal audit quality and financial reporting quality are the mediators of the audit committee effectiveness-organizational success relationships. In this study, the associations among audit committee effectiveness, internal audit quality, financial reporting quality, and organizational success of Thai listed firms are empirically and systematically verified. However, some listed firms in Thailand do not have the in-house internal audit function, but they have outsourced internal audit. Thus, future research needs to classify and separate Thai listed firms that use the outsourced internal audit from the database before collecting the data in order to increase the response rate of the study. In summary, for surviving and sustaining in rapidly environmental changes and conditions, firms can apply, implement and utilize audit committee effectiveness as the strategically value tool for achieving their goals in long-term operations.