MODERATING EFFECT OF AUDIT QUALITY ON THE RELATIONSHIP BETWEEN AUDIT COMMITTEE CHARACTERISTICS AND FINANCIAL REPORTING QUALITY OF LISTED INDUSTRIAL GOODS COMPANIES IN NIGERIA

Okechukwu Okonkwo (PhD), Ibrahim Hassan Jimba (PhD), Daniel Emmanuel Kayode (PhD)

Abstract


This study examines the moderating effect of audit quality on the relationship between audit committee characteristics and financial reporting quality of listed industrial goods companies in Nigeria. Correlational research design was used. The population of the study was the thirteen (13) quoted industrial goods companies in Nigerian Exchange Group (NGX) as at 31st December 2021, of which all the thirteen (13) companies were taken as the sample size using census sampling technique. The study period was from 2012 to 2021. The technique for data analysis used was regression analysis, this is because the study made use of panel data. Findings revealed that audit committee financial expertise, frequency of audit committee meeting and audit committee independence have significant positive effect on financial reporting quality while audit committee size has an insignificant negative effect on financial reporting quality. Audit quality has a significant positive effect in moderating the relationship between audit committee financial expertise, frequency of audit committee meeting, audit committee independence and financial reporting quality, however, the moderating effect of audit quality on the relationship between audit committee size and financial reporting quality is negative and significant. Board of directors should ensure that audit committee is dominated by members that are knowledgeable on accounting and financial matters. This is because the main responsibility of audit committee is to examine financial report and the inclusion of financially literate members in the audit committee will improve financial reporting quality.


Keywords


Financial Reporting Quality, Audit Quality, Big Bath Theory, Audit Committee Characteristics

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References


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