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Audit Committee Attributes and Earnings Management: Evidence from Nigeria

Ibadin L. Ayemere Ph.D and Afensimi Elijah ()
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Ibadin L. Ayemere Ph.D: Department Of Accounting, Ambrose Alli University, Ekpoma, Edo State.
Afensimi Elijah: Department Of Accounting, University Of Benin,

International Journal of Business and Social Research, 2015, vol. 5, issue 4, 14-23

Abstract: Using the agency theoretical framework, the study postulates that audit committee attributes can impact significantly, constraining accrual-based distortion of financial reporting credibility and thus improve the quality of financial reporting. To assess our arguments, audit committee size, audit committee financial literacy, audit committee attendance at meetings, audit committee independence and audit meetings frequency of meeting were regressed on financial reporting quality measured by discretionary accruals. The findings for the full sample and negative discretionary accruals sample confirm our expectation that audit committee characteristics have a constraining effect on earnings management. Specifically, audit committee financial expertise, audit committee size, audit committee independence and diligence showed an inverse and significant relationship with earnings management. This is in tandem with theoretical expectations and suggest that increases in these variables we exert a declining influence on earnings management. The study concludes that there is the need for companies to focus on attributes that strengthen the effectiveness of their audit committees.

Keywords: Audit committee financial expertise; audit committee independence; earnings management. (search for similar items in EconPapers)
Date: 2015
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