Audit Committee Diversity and Earnings Neutrality in Nigeria: Evidence from Quoted Consumer Manufacturing Firms
Vol 5 Issue 2
This study examined the effect of audit diversity earnings neutrality of financial reporting of quoted consumer goods manufacturing firms in Nigeria. Thirteen consumer goods manufacturing firms were selected from the population since they met the requirements for being chosen. Multi-method quantitative research design was used. Panel data were collected from financial reports of the firms. Earnings neutrality was used as dependent variable while gender diversity, age diversity, board experience diversity and professional membership diversity was used as independent variables. The study employed both descriptive and inferential statistics in executing univariate, bivariate and multivariate analyses. Findings of the study shows that gender diversity is negatively related to discretionary accruals but positively relating with earnings neutrality, age diversity has egative relationship with earnings neutrality. Board experience diversity versus earnings neutrality yielded negative and significant relationship under multivariate analysis but bivariate analysis of the same test produced insignificant negative relationship. Professional membership diversity is positively but insignificantly related with earnings neutrality. The study concludes that gender diversity and board experience diversity are significant determinants of earnings neutrality among listed consumer-goods manufacturing firms in Nigeria. We recommend that board recruiters and strategists should compose audit committees that seek to possess professional opinions on matters relating to their oversight duty, rather than composing one that should seek to outsource professional opinions to consultants by pursuing a composition policy based on professional membership diversity and audit committees of listed firms should be composed by those saddled with the duty by appointing board-experienced members with caution when the quality of their financial reports is of utmost importance.
