Audit Committee Composition and Earnings Management of Listed Consumer Goods Manufacturing Firms in Nigeria
Vol.6 Issue 2
The deliberate misrepresentation and manipulation of the financial statements by directors distorts the quality of information to users thereby reducing the credibility of the audit committee. This study investigates the relationship between audit committee composition and earnings management of listed consumer goods manufacturing firms in Nigeria. The study employed ex-post facto research design using a sample of thirteen (13) listed consumer goods manufacturing firms in Nigeria for a period of 8year (2012 – 2019). The ordinary least square regression technique was employed in the analysis of a pool of panel data obtained from published annual reports of the sampled firms. The study found that audit committee composition has significant relationship with earning management of sampled firms at 95% confidence level. The study concludes that audit committee composition has inverse but significant impact on earning management of listed consumer goods manufacturing firms in Nigeria. Based on the findings, it was recommended that audit committee should have more independent non-executive members to enable them reduce the occurrence of earnings management and other misstatements and independent non-executive members’ tenure should be specified under the Nigerian code of corporate governance to forestall familiarity threat and enhance financial reporting quality.
