The Link between Audit Committees, Corporate Governance Quality and Firm Performance

This literature review evaluates 146 empirical research studies on audit committees (AC) composition and resources which focus on the period after the Sarbanes Oxley Act (SOX). I will briefly introduce the theoretical, normative and empirical AC framework that comprises an adequate structure of the state-of-the-art of empirical research in this field. This is followed by a discussion of AC monitoring process which aims to enhance corporate governance quality, and is structured as follows: (1) financial reporting quality; (2) internal audit quality and (3) external audit quality. I will then evaluate the impact of AC on (4) firm performance. I will summarize the key findings in each area, and provide a description of the analyzed proxies for corporate governance quality and firm performance. Finally, I will discuss recommendations for future empirical AC research activities