Impact of Audit Committee Quality on the Financial Performance of the Iraqi Banking Sector

Purpose: The purpose of this study is to examine the impact of Audit Committee Quality on Financial Performance in the Iraqi Banking Sector to improve Financial Performance. The agency theory serves as the study’s theoretical underpinning. Design/methodology/approach: The major research design was a quantitative method employing Structural Equation Modelling (SEM). SmartPLS3 was utilized to examine data from a set of respondents who were chosen using a purpose random sampling technique which included the CEO, CFO, accountants, and auditors. The survey questionnaire was disseminated to 386 people, and the collected data were evaluated using a measurement model. Findings: According to the findings, the Audit Committee Components have a considerable impact on financial performance. The relationships were found to be positive and significant whereby Expertise (β =7.422, p0.05), Independence (β =4.549, p 0.05), Size (β=3.736, p0.05), and Meetings (β=3.064, p0.05). The Audit Committee component of Expertise was found to have the most significant impact on financial performance. Research, Practical & Social implications: Implications-wise, this study indicates the need for Iraqi banks to improve the quality of their audit committees towards enhancing their financial performance, also Central Bank should work side by side with Iraqi universities to continue research on the role of Audit Committees. Originality/value: This study provides an overview of the impact of the quality of the audit committee on financial performance and the extent of its importance in the Iraqi banking sector to reduce cases of manipulation and errors in the financial statements of banks. The study recommends the use of independent audit committees to improve financial performance in the Iraqi liquidation sector.