Audit committee characteristics and financial reporting quality in Nigeria : the mediating effect of audit quality

Audit committee characteristics and financial reporting quality in Nigeria : the mediating effect of audit quality

This study examines the mediating effect of audit quality (AQ) proxied by audit fees and Big 4 auditors on the relationship between the audit committee (AC) characteristics and financial reporting quality (FRQ) of listed companies in Nigeria. The study employed 88 firms listed in the Nigerian Stock...

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Main Author: Bala, Hussaini
Format: Thesis
Language:eng
eng
Published: 2019
Subjects:
HF5667 Professional Ethics
Auditors.
Online Access:https://etd.uum.edu.my/7874/1/Depositpermission_s901487.pdf
https://etd.uum.edu.my/7874/2/s901487_01.pdf
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id my-uum-etd.7874
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institution Universiti Utara Malaysia
collection UUM ETD
language eng
eng
advisor Amran, Noor Afza
Shaari, Hasnah
topic HF5667 Professional Ethics
Auditors.
spellingShingle HF5667 Professional Ethics
Auditors.
Bala, Hussaini
Audit committee characteristics and financial reporting quality in Nigeria : the mediating effect of audit quality
description This study examines the mediating effect of audit quality (AQ) proxied by audit fees and Big 4 auditors on the relationship between the audit committee (AC) characteristics and financial reporting quality (FRQ) of listed companies in Nigeria. The study employed 88 firms listed in the Nigerian Stock Exchange through 440 firm-year observations for five years ranging from 2012 to 2016. A multiple regression was employed to test the mediation using the Baron and Kenny and Sobel Tests. The findings reveal that the AC size, AC independence, AC financial accounting experts (ACFAEs), AC legal experts (ACLEs), female AC members (FACMs), AC stock ownership (ACSO), and AC tenure are negatively and significantly associated with the discretionary accruals (DA) and income smoothing (IS) behaviour of firms. In contrast, it is documented that the AC chair cannot be relied upon in minimising agency problems in a situation where the committee is chaired by a shareholder. The study shows that the AC size, AC independence, ACFAEs, ACLEs, and ACSO are positively related to AQ. It is established that AC meetings, FACMs, AC tenure, and AC chair are inversely related to AQ. It is also established that a higher audit fee is associated with lower DA and lower IS. Moreover, the mediation model reveals that audit fees partially and significantly mediate the relationships amongst the AC size, ACFAEs, ACLEs, FACMs, ACSO, and FRQ. This study recommends that the Nigerian SEC should, in the review of subsequent codes, recognise the presence of independent directors and legal experts in the AC as they are found to be effective monitors in constraining artificial smoothing. However, the regulators should be cautious about shareholders serving as chairpersons of the AC, and emphasis should be placed on the financial expertise and experience rather than relying on the status of the shareholders.
format Thesis
qualification_name Ph.D.
qualification_level Doctorate
author Bala, Hussaini
author_facet Bala, Hussaini
author_sort Bala, Hussaini
title Audit committee characteristics and financial reporting quality in Nigeria : the mediating effect of audit quality
title_short Audit committee characteristics and financial reporting quality in Nigeria : the mediating effect of audit quality
title_full Audit committee characteristics and financial reporting quality in Nigeria : the mediating effect of audit quality
title_fullStr Audit committee characteristics and financial reporting quality in Nigeria : the mediating effect of audit quality
title_full_unstemmed Audit committee characteristics and financial reporting quality in Nigeria : the mediating effect of audit quality
title_sort audit committee characteristics and financial reporting quality in nigeria : the mediating effect of audit quality
granting_institution Universiti Utara Malaysia
granting_department Tunku Puteri Intan Safinaz School of Accountancy (TISSA)
publishDate 2019
url https://etd.uum.edu.my/7874/1/Depositpermission_s901487.pdf
https://etd.uum.edu.my/7874/2/s901487_01.pdf
_version_ 1747828280959959040
spelling my-uum-etd.78742020-10-20T02:15:21Z Audit committee characteristics and financial reporting quality in Nigeria : the mediating effect of audit quality 2019 Bala, Hussaini Amran, Noor Afza Shaari, Hasnah Tunku Puteri Intan Safinaz School of Accountancy (TISSA) Tunku Puteri Intan Safinaz School of Accountancy (TISSA) HF5667 Professional Ethics. Auditors. This study examines the mediating effect of audit quality (AQ) proxied by audit fees and Big 4 auditors on the relationship between the audit committee (AC) characteristics and financial reporting quality (FRQ) of listed companies in Nigeria. The study employed 88 firms listed in the Nigerian Stock Exchange through 440 firm-year observations for five years ranging from 2012 to 2016. A multiple regression was employed to test the mediation using the Baron and Kenny and Sobel Tests. The findings reveal that the AC size, AC independence, AC financial accounting experts (ACFAEs), AC legal experts (ACLEs), female AC members (FACMs), AC stock ownership (ACSO), and AC tenure are negatively and significantly associated with the discretionary accruals (DA) and income smoothing (IS) behaviour of firms. In contrast, it is documented that the AC chair cannot be relied upon in minimising agency problems in a situation where the committee is chaired by a shareholder. The study shows that the AC size, AC independence, ACFAEs, ACLEs, and ACSO are positively related to AQ. It is established that AC meetings, FACMs, AC tenure, and AC chair are inversely related to AQ. It is also established that a higher audit fee is associated with lower DA and lower IS. Moreover, the mediation model reveals that audit fees partially and significantly mediate the relationships amongst the AC size, ACFAEs, ACLEs, FACMs, ACSO, and FRQ. This study recommends that the Nigerian SEC should, in the review of subsequent codes, recognise the presence of independent directors and legal experts in the AC as they are found to be effective monitors in constraining artificial smoothing. However, the regulators should be cautious about shareholders serving as chairpersons of the AC, and emphasis should be placed on the financial expertise and experience rather than relying on the status of the shareholders. 2019 Thesis https://etd.uum.edu.my/7874/ https://etd.uum.edu.my/7874/1/Depositpermission_s901487.pdf text eng staffonly https://etd.uum.edu.my/7874/2/s901487_01.pdf text eng public https://sierra.uum.edu.my/record=b1699031~S1 Ph.D. doctoral Universiti Utara Malaysia Aanu, O., Odianonsen, I. ., & Taiwo, A. (2015). Audit committee financial expertise: antidote for financial reporting quality in Nigeria? Mediterranean Journal of Social Sciences, 6(1), 136–146. Abata, M.A., & Migiro S.O. (2016). 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