Business bribery, corruption and fraud: audit committee and external auditor’s attributes in GCC countries

Abstract

Purpose This paper aims to identify key determinants of ethical conduct by examining the impact of audit committee and external auditor attributes on business bribery, corruption and fraud (BCF) in Gulf Cooperation Council (GCC) countries. Design/methodology/approach A logistic regression model explores the relationship between the audit committee, external auditor attributes and BCF occurrences in GCC-listed firms from 2020 to 2023. Robust standard errors control for firm clustering and heteroscedasticity. Findings The authors found a significant positive relation between audit committee size, meetings and members’ expertise and BCF. Also, the authors found a positive relation between audit fees and BCF and a negative relation between audit firm size and BCF. Research limitations/implications The paper provides valuable insights for enhancing corporate governance and reducing BCF in GCC countries. Practical implications For auditors, establishing robust audit committees and strengthening regulatory frameworks improve BCF detection. Regulators should mandate stricter audit committee requirements and enforce internal audit regulations to combat BCF. For investors, prioritizing companies with more extensive, reputable auditors and sufficient audit fees may signal lower BCF risks, offering valuable insights for governance improvements. Social implications The study expands agency theory by investigating how audit committee and external auditor attributes influence BCF in GCC markets, where weak governance frameworks exacerbate corruption risks, extending the theory’s relevance to emerging markets. Originality/value The paper challenges traditional views on the effectiveness of audit committees, showing how specific attributes can hinder BCF detection. In addition, it highlights the critical role of large audit firms in reducing BCF risks in emerging markets.