Auditors’ Attributes and Earnings Management of Listed Insurance Companies in Nigeria

Abstract

This study investigates the relationship between auditors’ attributes and earnings in a subset of companies listed on the Nigerian Exchange Group. Ex-post facto design was employed and eighteen insurance firms audited annual reports and accounts served as the source of the data. Secondary data on auditors’ attributes (audit fee, audit tenure, audit firm size and auditor independence score) and earnings management measure (discretionary accrual) were obtained and computed for the listed insurance companies. Data obtained were analyzed using the ordinary least square regression methodology. Hence, the robustness test was used to evaluate the viability of the tested hypotheses. Additionally, data was subjected to varied regressions using ordinary least square. After data analysis, it was found that audit firm size and earnings management have a positive and substantial association. Additionally, there is a strong and favourable correlation between earnings management, audit fee and auditor independence. The researchers advise supporting large companies since they are adept at reducing the adverse consequences of earnings management, based on the aforementioned observations. In order to create high-quality reports free of profits manipulations, auditor independence should also not be compromised.