Moderating Effect of Audit Committee on the Relationship Between Audit Quality and Earnings Management of Listed Non-Financial Services Firms in Nigeria (original) (raw)
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The effect of audit committee characteristics on earnings management in Nigerian listed firms
Technology audit and production reserves, 2023
This study focuses on the effect of audit committee characteristics on earnings management among Listed Firms in Nigeria with aim to ascertain whether audit committee characteristics has effect on earnings management. Audit committee in an organization is to support firm's governance and oversight functions with the regard to financial reporting, risk management system internal control structure, ethical accountability and internal and external audit functions. Earnings management is an attempt by managers to alter financial information either for their private gain or for the gain of stockholders. The study population was 190 firms listed in the Nigerian Stock Market. The study sample was 150 firms because 40 firms could not provide the needed data for the study as at 2014 to 2019. The study data was generated from the Thomson Reuters Data stream and other variables were handpicked from the firm's annual reports covering the period of 2014-2019. A Generalized Least Square (GLS) estimator was used in estimating the parameters. The study provides positive and significant relationship between Audit Committee Independence (ACIND), Audit Committee Meetings (ACMT) and Earnings Management of listed Nigerian Firms in Nigeria. However, negative relationship between Audit Committee Size, Audit Committee Financial Expertise, Firm Size and Earnings Management was reported among the Listed Firms in Nigeria. Policy maker should provide policy on the composition of Audit for the committee members to clearly spelt out to enable members perform their functions effectively. Further study should look at diversity of audit committee, ethnicity, and religious influence because of the Nigerian diversity on ethnicity and religion.
Effects of Characteristics of Audit Committee on Earnings Management inNigerian Quoted Companies
2016
The aim of this study is to examine the effect of Characteristics of Audit Committee on Eamings Management in Nigerian quoted companies. Data for the study were sourced from annual reports of one hundred and thirty one (131) companies quoted on the Nigerian Stock Exchange over the period of 2008 to 2014. The data were analysed using descriptive, correlation and Ordinary Least Square (OLS). The multivariate regression technique was utilised to estimate our model. The choice of this approach was based on the fact that our data are both time series and cross sectional. Our findings, using the panel regression results, indicate that each of these characteristics of audit committee, namely: audit committee independence, audit committee frequency of meetings and audit committee meeting attendance had a negative significant impact on eamings _ management. This implies that audit committee independence, audit commitTee frequency of meetings and audit committee meeting attendance are useful ...
Zenodo (CERN European Organization for Nuclear Research), 2023
Audit tenure in particular, has become a lingering issue after the accounting scandals involving wide-ranging corporate entities from both local and global business environments. This lingering issue has prevented auditors from conducting some specific non-audit services. This study examines the moderating role of audit committee independence on the relationship between audit tenure and financial reporting quality of listed non-financial services firms in Nigeria over a period of 2011-2021. The study employed ex-post facto as the research design for the study while data was obtained from the secondary sources. The method of data collection was by extraction from the annual audited financial reports and accounts of listed non-financial services firms in Nigeria. The sample size comprises of 30 listed non-financial services firms selected using purposive sampling techniques. Multiple regression was employed as the techniques for data analysis in the study. The Results of the analysis showed that the direct relationship has no effect on financial reporting quality of listed non-financial services firms in Nigeria. However, the effect of audit tenure on financial reporting quality is statistically significant when moderated by audit committee independence. The study recommends that more independent directors should be included on the audit committee of listed non-financial companies in Nigeria in order to improve the financial reporting quality of listed non-financial companies in Nigeria.
Вестник Волгоградского государственного университета. Экономика, 2022
This study assessed the impact of audit committee characteristics on earnings management of Nigerian listed consumer goods firms. The study adopted a correlational research design using secondary data extracted from the financial statement of selected 10 firms from 2010 to 2019. The selected firms were from 21 listed consumer goods firms listed in Nigeria as of 2019 using a judgmental sampling technique based on the availability of data. Correlation analysis, Unit-root test, Ordinary Least Squares (Fixed effects) regression were the statistical tools used for analysis with the aid of E-views Software, version 10. The study revealed a significant and negative relationship between Audit Committee Meetings, Audit Committee Size, Leverage, and Earnings Management (P < 0.05). However, Audit Committee Financial Expertise, Audit Committee Independence showed a positive and insignificant relationship with earnings management (p > 0.05). The study concluded that firms with adequate audit committees attribute moderate earnings management practices. The study suggested that shareholders and regulatory bodies should ensure adequate and effective audit committee structure.
Audit Committee Characteristics and Earnings Quality
The relationship between Audit Committee characteristics and earnings quality is imperative. The mix of opinions makes the direction of their relationship ambiguous. This study investigated the relationship between Audit Committee characteristics and earnings quality of listed food and beverages Firms in Nigeria. The study covered the period of six years from 2007 to 2014. Data for the study were extracted from the Firms’ annual reports and accounts. After running the OLS regression, a robustness test was conducted for validity of statistical inferences. The dependent variable was generated using two steps regression in order to determine the discretionary accrual of the sample Firms. Multiple regression was employed to run the data of the study using OLS. The results from the analysis revealed significant association between audit committee characteristics and earnings quality of the Firms. While audit committee size and committees’ financial expertise showed inverse relationship with earnings management, committee’s independence and frequency of meetings are positively and significantly related to earnings management. In line with the findings, the study recommended among others that listed food and beverages Firms in Nigeria should strictly comply with the provision of Companies and Allied Matters Act (CAMA) and SEC Code of Corporate Governance on the issues regarding Audit Committees of having six members, equally represented by three shareholders and three directors. However, regulators such as SEC should increase the minimum number of Audit Committee members with financial expertise and they should also have a statutory position on the maximum number of Audit Committees meetings, which should not be greater than four meetings in a year as SEC code of corporate governance is silent on this. The study is only limited to the domain of the listed Food and Beverages Firms in Nigeria. As such, our findings and recommendations are only applicable to listed Food and Beverages Firms in Nigeria. For that, further research may be needed to be conducted on the audit committee attributes in other sectors other than manufacturing like financial institution. Key Words: Audit Committee, Firm Size, Leverage, Earnings Management and Listed Food and Beverages Firms in Nigeria.
Audit Committee and Earnings Management in Quoted Manufacturing Firms in Nigeria
The Millennium University Journal, 2019
This study evaluates the audit committee impact on earnings management of listed manufacturing companies in Nigeria. The study uses secondary data which were extracted from ten (10) sampled manufacturing firms listed in the Nigerian Stock Exchange (NSE) for the period 2010-2019. The study used Random Effects Model (REM) for the analysis of data. The results showed that financial expertise of audit committee has significant negative impact on earnings management while audit committee tenure has an insignificant negative impact on earnings management. Furthermore, share ownership of audit committee has significant negative impact on earnings management. The study therefore, concludes that both the audit committee expertise and share ownership of audit committee enhance the financial reporting quality of manufacturing firms in Nigeria. Based on the impact of members of audit committee with financial expertise, the study recommends among others that, the board should ensure appointing the sufficient audit committee members that are experts on financial matters. Similarly, the study also recommends the enclosure of more members with substantial shareholdings in the audit committee. This can enhance their willingness to protect their investment and helps in proper monitoring and supervision, thereby reducing earnings management.
THE ASSOCIATION BETWEEN AUDIT QUALITY AND EARNINGS MANAGEMENT BY LISTED FIRMS IN NIGERIA
This study examines the association between audit quality and earnings management by listed firms in Nigeria. The study measures audit quality by audit firm size and earnings management by the absolute abnormal discretionary accruals using the modified Jones model. The study was carried out in two parts, the first part is the comparative study using independent sample t-test and the Wilcoxon signed ranked test. The second part is the multivariate analysis where the association between audit quality and earnings management was examined. Based on our analysis, we found that auditor size has restrained earnings management but the decrease is not statistically significant. The implication of this finding is that users should not blindly assume that high audit quality proxy by the big 4 auditor is a symbol of earnings quality.
Research Journal of Finance and Accounting
This study examined the effect of audit quality proxied by Auditors' Independence (ADI), Audit Firm Size (AFS), Auditor Tenure (ADT) and Audit Firm Specialization (ADS) on shareholders' earnings (measured as Earnings per Share-EPS) and stock performance (measured as Market Price of Stock-MPS) of listed manufacturing companies in Nigeria, in the pre-and post-International Financial Reporting Standard (IFRS) periods. To achieve this, the study used eleven (11) listed manufacturing companies listed companies that had consistently published their audited annual financial reports from 2009 to 2018. Descriptive statistics, correlation analysis and Ordinary Least Square (OLS) univariate and multiple regression technique were adopted to analyse data obtained, with the ex-post facto research design employed in the methodology. The following results were obtained from the test of hypotheses. Auditors independence, audit firm size and auditors firm specialization have significant and positive impact on EPS and MPS. However, auditors' tenure was found to significantly affect both EPS and MPS negatively. The IFRS moderated model results revealed that audit quality variables have higher and more positive impact on EPS and MPS in the post-IFRS period, relative to the pre-IFRS, with their effects being statistically significant using the wald restriction test. The findings have direct implication on earnings management and stock performance in the Nigerian Manufacturing Industry.
Audit committee effectiveness, audit quality and earnings management: evidence from Ghana
Isaac Bawuah, 2024
The paper investigates the effect of Audit Committee Effectiveness (ACE) on Earnings Management (EM) and consequently examines whether audit quality (Big4) can moderate the link between ACE and EM in Ghana. First, the study uses panel data from 25 non-financial firms in Ghana, and employs the fixed-effect (FE) and Two-stage Least-squares (2SLS) regression methods. Second, the evidence shows that ACE (AC independence, AC size and AC meetings) constrain EM with the effect being stronger for AC independence. Thus, firms with ACE tend to report lower earnings management. Third, further analysis reveals that the combined effects of Big4 and ACE (AC independence and AC meetings) on EM are stronger than ACE alone. This suggests that audit quality negatively moderates the link between ACE and EM. Finally, leverage, profit, cash flow and firm size affect EM.
Review of Economics and Finance , 2023
Regardless of the significance of the corporate governance mechanisms and audit quality in observing earnings management, the results of prior studies have been conflicting, and the majority of the investigations have been carried out in both developed and developing nations among which Nigeria has many differences with them. However, the financial calamities in Nigeria are increasing due to the need for looking at the indicators of earnings reliability as the major factor. This study's main objective is to examine the mediating effect of audit quality on the association between corporate governance mechanisms and earnings management using the four causal stages of Baron and Kenny's assumptions for mediation. Thus, the study reported all relevant mediation model results, hence, it only considered the mediating relationship. The study used all listed firms in the Nigerian stock market from 2017 to 2021 financial year. The data was collected from secondary sources of data streams, annual reports, and accounts of the firms. The data were analyzed using multiple regression after all necessary diagnostic tests. However, seven variables of corporate governance were employed and only three of Board Size, Board Independence and Audit Committee Gender certified the conditions of mediation and four of Board Gender, Audit Committee Size and Audit Committee Accounting Expertise failed. The finding of this study highlighted to what degree the audit quality effect is mediating the mansion relationship which contributed to the relevant literature. It also provides a basis on which practitioners, corporate managers, and all users of financial reports can make a rational investment decision in Nigeria and across the globe.