Optimizing Scale Efficiency: Examining Audit Committee Size and Diligence in Nigerian Manufacturing Firms

Abstract

This study investigates the relationship between audit committee size, audit committee diligence, and scale efficiency in Nigerian manufacturing firms. Audit committee size influences the breadth of expertise and oversight capacity, while diligence, measured by the frequency of meetings, reflects the committee’s commitment to effective monitoring and decision-making. Using a panel dataset, the study analyzed data from 50 listed Nigerian manufacturing firms between 2012 and 2022. Panel regression models were used to evaluate the impact of these audit committee attributes on scale efficiency, measured through scale efficiency based on turnover and scale efficiency based on assets. The findings reveal that audit committee diligence has a positive and statistically significant impact on scale efficiency based on assets, highlighting the importance of regular and structured meetings in enhancing operational efficiency. However, diligence showed an insignificant relationship with scale efficiency based on turnover, indicating that frequent meetings alone may not directly influence revenue-based efficiency. Audit committee size exhibited a negative and statistically significant relationship with scale efficiency based on assets, suggesting that excessively large committees may hinder operational performance. These results contribute to the existing literature on corporate governance by providing empirical evidence on the role of audit committee attributes in promoting scale efficiency in Nigerian manufacturing firms.