AUDIT COMMITTEE SIZE AND QUALITY OF FINANCIAL REPORTING OF LISTED CONSUMER’S GOODS MANUFACTURING COMPANIES IN NIGERIA

Abstract

The research examined Audit Committee Size and Financial Reporting Quality of listed Consumer’s Goods Manufacturing Companies in Nigeria. Previous studies on Audit Committee characteristics have focused mainly on the impact of audit committee characteristics on financial performance in the stock market without highlighting the factors that may determine the likelihood or otherwise of audit committee size as well as the relationship of audit committee characteristics and Financial Reporting Quality. This study covers this area by examining the possible relationship of audit committee size and Financial Reporting Quality. The study adopted the ex-post facto research design with extensive reliance on secondary data generated from the annual reports of companies for the period 2011-2020. The population of the study consisted of 15 listed consumer’s goods manufacturing companies in the Nigerian Stock Exchange (NSE). The Eviews 9.0 statistical software was used to analyze the data. The results indicates as follows: that audit committee independence was positively and insignificantly related to timeliness, negatively and insignificantly related to faithful representation; there was a positive and statistically insignificant relationship between audit committee expertise and timeliness and faithful representation. The study concludes that there is a relationship between the dimensions of audit committee characteristics and Quality financial reporting of quoted listed consumer’s goods manufacturing companies in the Nigerian Stock Exchange (NSE). Based on the findings, the study recommends that Size of the audit committee is not a factor in checkmating managers’ opportunistic attitude. Increasing their number on the committee is just an addendum to the firm’s administrative expenditure instead of curbing real activity manipulation which affects the firm’s cash flow from operations. The Study recommends also that experienced members with knowledge in accounting and auditing should be more because they will have valuable outlook and comments in improving the committee’s productivity and also members who specializes in accounting and finance can analyze and examine the financial statement effectively and efficiently for better results. Based on the foregoing the study recommends that in order to elicit the best in terms of effectiveness and efficiency, management should not meddle in the affairs of the audit committees so that they can achieve independent and unbiased judgment.