The effect of board diligence on the audit committee effectiveness during the COVID-19 crisis: Empirical evidence from French companies

Abstract

The purpose of this research is to investigate the effect of board diligence on the audit committee’s effectiveness throughout the COVID-19 pandemic. Using a sample of the top 164 non-financial French companies listed on CAC All-Tradable during 2020. The paper employs the ordinary least squares method to look at the relation between audit committee effectiveness score and board activity during the health crisis. The results indicate that board activity positively affects the effectiveness of the audit committee during the COVID-19 crisis. We find a significant positive association at the 1 percent level between company size and audit committee effectiveness scores related to companies in the medical sector. However, factors such as firm age and leverage had no impact on effectiveness. We recall that this line of research is very little explored in the world and that our study is the first to have addressed this issue in the French context. This result cements the notion to professionals, managers, and stakeholders who deem that the board of directors is a pillar of success and resilience, as it is considered the most relevant governance mechanism in critical situations.