Audit Committee Financial Expertise, Firm Size and Financial Performance of Insurance Companies in Kenya

Abstract : This study examined the moderating effect of firm size on the relationship between audit committee financial expertise and financial performance of insurance companies in Kenya. The study was anchored on agency theory and adopted a positivist philosophy together with a causal research design. A census approach was applied on 49 insurance firms operating between 2015 and 2024, yielding balanced panel data from 44 firms with complete records. Secondary data were obtained from audited financial statements, annual reports, and regulatory publications. Data were analyzed using descriptive statistics and panel regression models estimated using fixed and random effects with cluster-robust standard errors. The findings revealed that audit committee financial expertise had a negative but statistically insignificant relationship with financial performance (β = −0.034, p = 0.784). Firm size also exhibited a positive but statistically insignificant relationship with ROE (β = 1.061, p = 0.460). Further, the interaction between audit committee financial expertise and firm size was negative and statistically insignificant (β = −2.752, p = 0.361), indicating that firm size does not moderate the relationship between audit committee financial expertise and financial performance among insurance companies in Kenya. The study concludes that audit committee financial expertise does not significantly influence financial performance and that organizational scale does not condition this relationship within the Kenyan insurance sector. The study recommends strengthening the practical effectiveness of audit committees through broader governance reforms, continuous professional development, and enhanced oversight mechanisms within insurance firms.