Moderating Effect of Audit Quality on the Relationship between Audit Committee Characteristics and Financial Reporting Quality of Listed Deposit Money Banks in Nigeria

Abstract

Purpose: This study examines the effect of audit committee size and audit committee independence on financial reporting quality and investigates the moderating effect of audit quality among listed deposit money banks in Nigeria. Methodology: The study adopted an ex post facto research design and a panel-data approach. The population comprised 13 listed deposit money banks in Nigeria, from which 10 banks were purposively selected. Secondary data were obtained from the audited annual reports of the sampled banks covering the period 2016–2025, yielding 100 firm-year observations. The data were analysed using descriptive statistics, diagnostic tests, the Hausman specification test, and  fixed-effects panel regression. Results and conclusion: The findings reveal that audit committee size has a positive and significant effect on financial reporting quality, while audit committee independence has a positive but insignificant effect. Audit quality has a negative and insignificant effect, while its interactions with audit committee size and independence are also negative and insignificant. The study concludes that audit committee size significantly improves financial reporting quality, whereas other examined governance mechanisms do not significantly influence financial reporting quality Implication of findings: The findings imply that strengthening audit committee size may improve financial reporting quality among listed deposit money banks in Nigeria. However, the insignificant effects of audit committee independence, audit quality, and their interactions suggest that structural characteristics alone are insufficient. Greater emphasis should therefore be placed on audit committee effectiveness, expertise, independence, and monitoring capacity.