Purpose This study aims to reconceptualise audit committee effectiveness as a hierarchical, relational system and develops a conceptual framework grounded in qualitative empirical evidence to address persistent inconsistencies in proxy-based audit committee research. Design/methodology/approach Using Interactive Qualitative Analysis (IQA), two focus groups comprising 29 highly experienced audit committee members and stakeholders identified 365 sub-affinities, clustered into 34 affinities influencing audit committee effectiveness. These were refined into 12 themes and six meta-themes, organised into a hierarchical structure of drivers, a pivot and outcomes. Findings This study develops a three-tiered hierarchical-relational conceptual framework consisting of three drivers (composition and characteristics; trust, ethics and governance; power and authority), one pivot (risk management) and two outcomes (assurance and resources; meetings and reporting). Twenty-four interrelationships among the six meta-themes are identified. Based on this, a general definition of an effective audit committee is proposed. Originality/value Prior research has predominantly relied on quantitative proxies, generating inconsistent findings and conceptual overlap. This study, based on qualitative empirical data, uniquely contributes to the literature by (1) re-specifying audit committee effectiveness as a hierarchical-relational system, (2) identifying “trust, ethics and governance” as a driver of audit committee effectiveness, and (3) identifying “risk management” as a systemic pivot rather than a task responsibility. Unlike prior studies, the qualitative methodology used enabled examination of causality to further probe the essential elements identified. Given the importance of effective audit committees in corporate governance, potentially reducing fraud and irregularities, this hierarchical-relational conceptual framework will interest researchers and have several practical implications, specifically for audit committee members and stakeholders, boards, management, internal auditors, external auditors, shareholders, legislators and regulators.
Aveen Rampershad (Thu,) studied this question.