Voluntary formation of audit committees in non-listed companies: The case of Morocco

Abstract

The aim of this study is to observe the circumstances that led to small and medium enterprises to voluntarily adopt audit committees. The study of audit committees has been widely discussed in the literature, although most studies have focused on listed companies in the Anglo-Saxon environment. In contrast, corporate governance in small and medium enterprises has not been the subject of much attention by researchers, and even less so the voluntary formation of audit committees. This paper applies a logistic regression to data collected from a questionnaire sent to all businesses that have established strategic alliances between Spain and Morocco. The results were that the younger companies in which the directors have a lower stake, whose boards of directors have no institutional presence, but a higher proportion of non-executive directors, are more likely to voluntarily create audit committees. This paper provides a better understanding of the mechanisms of control adopted by small and medium enterprises in an emerging economy. In particular, it shows that these companies recognize the benefits of voluntary formation of audit committees in improving corporate governance.