Impact of audit committee and operating assessment on accounting and market performance of conventional and Islamic banks in Saudi Arabia

Purpose This paper aims to analyze and compare the impact of audit committee characteristics and bank operating performance assessment, based on the five bank’s operating parameters framework, on accounting and market performance of Islamic and conventional banks in Saudi Arabia for the period 2014–2023. Design/methodology/approach Multiple regression is used to test 16 hypotheses for the relationship between the 6 independent variables and the 2 dependent performance variables for both types of banks. Findings Results indicate none of the audit committee features affect profitability performance but for market performance, both audit committee size and audit committee independence have significant positive effects for conventional banks while only the frequency of audit meetings in the case of Islamic banks. The performance assessment based on capital adequacy, asset quality, management, earnings, and liquidity (CAMEL) revealed a significant relationship between management efficiency and earnings quality on profitability for Islamic banks but for conventional banks, capital adequacy, earnings quality and liquidity affect profitability. With regard to market performance, only capital adequacy has a significant effect on Islamic banks while both capital adequacy and earnings quality have a significant effect on Saudi conventional banks. With regard to the control variables, bank size has a significant positive effect on market performance for both types of banks while bank age is associated with the market performance of Islamic banks but with profitability for conventional banks. Year has significant negative effects on both profitability and market value for conventional banks especially during and post-COVID-19 period. Research limitations/implications The findings of this study have important implications for bankers, depositors and regulators in their management, decision choices and policy-making, respectively. Originality/value This study makes a noteworthy contribution to the current literature on bank performance, audit committee and banks’ operating profile in Saudi Arabia.