The role of the audit committê structure and the stability of Vietnam's commercial banks

Abstract

Problem/Relevance: The role of the audit committee in maintaining banking stability is more and more important. However, there are not many studies have examined the relationship between the audit committee structure and bank stability in developing countries. Research Objective/Questions: This paper exammes the relation of the audit commrttee structure an m the difterence level of bank stab the role of external audit quality in this relation Methodology: To achieve the objectives of this research, this study employed empirical techniques like 2SLS, S-GMM or quantile regression analysis with panel data, using a sample of37 commercial banks in Vietnam from 2002 to 2018. Major Findings: Our empirical results show that bank stability varies negatively with audit committee size, but this relationship is mitigated in banks that use a good external audit services. Moreover, we also find that the relation of the audit committee structure and bank stability is heterogeneous, it is stronger in banks with higher stability levels. Implications: Base on these results, bank which have a large audit committee should consider a high quality external audit service and should increase the proportion of financial and accounting expe1t in audit committee in order to ensure bank stability.