Author(s): Saddam Ali Shatnawi, Ahmad Marei, Mustafa Mohd Hanefah, Monther Eldaia, Saad Alaaraj
The Audit Committee (AC) is one of the most indispensable mechanisms of CG that impacts corporate performance. In Jordan, there exists a limited separation between the company owners and AC members, where executive managers from family owners make direct decisions and taking risks, consequently limiting the effectiveness of AC. The purpose of this study is to determine the effect of ACE on financial performance (FP) of companies listed on Amman Stock Exchange (ASE). It also aims to examine the moderating effect of enterprise risk management (ERM) between ACE and FP in Jordan. This study uses data from 2009 to 2017 with 92 selected firms cover a period of 9 years of companies listed in ASE in industrial and service sectors. Data was analyzed using STATA. The findings demonstrated that ACE has a significant relationship with ROA, ROE, and Tobin’s Q. Similarly, firm size has a positive relationship with ROA, ROE, and Tobin’s Q, while leverage and firm age have negative relationships with ROA, ROE, and Tobin’s Q. The tested model is statistically significant and can predict 46.7% of the variation in all performance variables. In terms of moderating effect, the findings showed that ERM positively moderated the effect of ACE on ROA and ROE in Jordan. However, it did not support the moderating role between ACE and Tobin’s Q. Decision makers have to enforce the implementation of ERM in Jordanian companies to improve the FP.