Audit committee diversity as a moderator of the relationship between financial crises and firm profitability: evidence from the COVID-19 pandemic

Purpose This study examines the moderating role of audit committee diversity in the nexus between financial crises (the COVID-19 crisis) and profitability. Design/methodology/approach This study analyses Jordanian non-financial companies listed on the Amman Stock Exchange as a sample for the study from 2018 to 2022. The hypotheses were tested using panel-corrected standard errors (PCSE) regression analysis to address the issues of heteroscedasticity and autocorrelation. This study uses the system Generalised Method of Moments (GMM), along with fixed-effects and dynamic regression analyses to address endogeneity concerns. Findings This paper concluded that the COVID-19 crisis negatively impacted the profitability of companies. Gender diversity moderated this relationship, significantly mitigating the negative impact of the pandemic, whereas the results did not indicate that nationality diversity played a moderating role. Practical implications This investigation relies on the novel results concerning the moderating effects of audit committee diversity characteristics, offering guidance to regulators on incorporating these underrepresented traits into corporate governance codes in Jordan and similar developing countries. Originality/value The literature investigating diversity’s influence on corporate profitability during crises predominantly emphasizes board-level diversity, direct impacts, and gender diversity. However, it often overlooks diversity within the audit committee and its effects when interacting with a crisis. To the author’s knowledge, this is the first study examining the moderating role of audit committee diversity (gender and nationality) in the association between the COVID-19 crisis and profitability in developing countries.