Research Article

FINANCIAL REPORTING QUALITY AND CORPORATE GOVERNANCE: DO AUDIT COMMITTEE CHARACTERISTICS MATTER?

Abubakar Bawa Wali1*
1 Department of Accounting, Federal College of Education (Technology) Gusau Zamfara State
* Corresponding author: wali.abubakar@yahoo.com
Published: Jul, 2016
DOI: 10.67203/njar.2016.yklyoxn8
Pages: 27-48
Views: 112
Downloads: 48

Abstract

The role of audit committee (a sub-set of the larger board) in corporate governance and whether its presence affects financial reporting quality have attracted a lot of research and diverse opinions. This study investigated the relationship between financial reporting quality proxied by earnings management and Audit Committee characteristics of listed manufacturing firms in Nigeria. The study covered a period of seven years from 2008 to 2014. Data for the study were extracted from the firms’ annual reports and accounts. The dependent variable, earnings management was generated using two steps regression adopting the Modified Dechow and Dichev model as in Mc Nichols (2002) model in order to determine the earnings management of the sampled firms. Multiple regressions are used to run the data of the study using OLS estimation. The results from the analysis revealed significant association between audit committee characteristics of size, financial expertise and number of meetings with the dependent variable. However no significant association was found regarding the presence of a financial expert on the committee. In accordance with the findings, the study recommends that regulatory authorities should in line with current best practices ensure that all three director members on audit committee (as provided by the SEC, 2011 code of corporate governance) of firms should be outside independent directors as opposed to the Financial Reporting Quality and Corporate Governance: do Audit Committee Characteristics… current requirement of only one independent director. It is also recommended that firms increase the number of audit committee meetings beyond the statutory requirement.

Keywords

audit finance

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How to Cite

Wali, A. B. (2016). FINANCIAL REPORTING QUALITY AND CORPORATE GOVERNANCE: DO AUDIT COMMITTEE CHARACTERISTICS MATTER?. Nigerian Journal of Accounting Research, 12(1), 27-48. https://doi.org/10.67203/njar.2016.yklyoxn8

A. B. Wali, "FINANCIAL REPORTING QUALITY AND CORPORATE GOVERNANCE: DO AUDIT COMMITTEE CHARACTERISTICS MATTER?," Nigerian Journal of Accounting Research, vol. 12, no. 1, pp. 27-48, July 2016. doi: 10.67203/njar.2016.yklyoxn8

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