Audit Committee Characteristics and Financial Reporting Quality of Listed Commercial Banks in Nigeria

Abstract

This study investigated the relationship between Audit Committee characteristics and financial reporting quality of listed Commercial Banks in Nigeria. To achieve this objective, research questions and hypotheses were designed in line with two specific objectives. Relevant concepts were reviewed along with the review of empirical literature. The study was anchored on Agency theory. In line with the aforesaid, secondary data were obtained from the financials of 11 commercial banks in Nigeria. Relevant statistical tools were however employed to analyze the data and the hypotheses were tested using probit regression analysis. Based on the results from the analytical procedure of this study, it was observed that in testing the relationship between Audit Committee Independence and financial reporting quality measured by Beneish Mscore of listed Commercial banks in Nigeria, the computed value of 10.14 with a corresponding P value of 0.0015 implying that Audit Committee independence has significant impact on financial reporting quality of listed Commercial banks in Nigeria. Additionally, Audit Committee tenure recorded Fstat of 0.12 with a corresponding P value of 0.7345 implying that Audit Committee tenure has insignificant relationship with financial reporting quality of listed Commercial banks in Nigeria. The study therefore recommends that Regulators in banking sector should insist on mandatory professional qualification suggested by Federal reporting council of Nigeria in 2016 draft of suspended National code of Corporate governance in order to strengthen the skill and diligence of audit committee.