Impact of Audit Committee Characteristics on Earning Management of Listed Consumer Goods Companies in Nigeria (2011-2020)

Haruna Usman, Tosin Olushola and Amina S. Mohammed
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Haruna Usman: Business Education Department, School of Vocational and Technical Education, Aminu Saleh College of Education, Nigeria
Tosin Olushola: Business Education Department, School of Vocational and Technical Education, Aminu Saleh College of Education, Nigeria
Amina S. Mohammed: Business Education Department, School of Vocational and Technical Education, Aminu Saleh College of Education, Nigeria

International Journal of Research and Innovation in Social Science, 2022, vol. 6, issue 9, 349-358

Abstract: This study aims to examine the impact of audit committee characteristics on earning management of listed consumer goods companies in Nigeria. The characteristics of the audit committee consist of audit committee independence, audit committee member diversity, audit committee member size and audit committee member meetings. Earnings management is perceived to be spreading across companies and industries; it distorts and portrays an incorrect picture of a firm’s financial performance. Audit committees are a popular corporate governance tool to improve the credibility of financial statements. This study uses a secondary source of data from listed consumer goods companies in the Nigerian stock Exchange from 2011-2020. The dependent variable was generated using two steps regression in order to determine the discretionary accrual of the sample Firms (Earnings Management). Multiple regression was employed to run the data of the study using STATA 16. The findings of the study reveal that audit committee independence has no effect on earnings management; the diversity of the audit committee has no effect on earnings management. The number of meetings of the audit committee members has no effect on earnings management. The size of audit committee has a significant positive effect on earnings management. It recommends that number of audit committee members be increased to include large number drawn base on the expertise which may be in a better position to discover and question management on dubious accounting practices.

Date: 2022
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