Audit Committee Independence, Meeting Frequency, Attendance and Financial Reporting Quality of Listed Deposit Money Banks in Nigeria

Abstract

Audit committee is a statutorily corporate governance mechanism introduced to curb financial reporting manipulation therefore enhanced the quality of financial reports. However, the effectiveness of the audit committee is dependent on its attributes. This paper examines the influence of the audit committee attributes of independence, meeting frequency and attendance on the financial reporting quality of listed deposit money banks in Nigeria. Data was generated from the annual reports and accounts of six purposively sampled banks during the period 2003 to 2012. The data was analyzed using Pearson correlation statistics and OLS regression. The results show that audit committee independence has negative and significant influence on financial reporting quality of listed deposit money banks in Nigeria. While, audit committee meeting frequency and attendance has positive and significant influence on financial reporting quality of listed deposit money banks in Nigeria. The paper recommends that the Central Bank of Nigeria should step up monitoring the appointment of persons into audit committees and amend the provision of having shareholders and directors on audit committee to all members being independent Non-Executive Directors (NEDs), increase the minimum number of meetings from three to at least four, and regulate for the replacement of any member who is absent at meetings more than once in a year.

Keywords: Audit committee, independence, meeting frequency, attendance, financial reporting quality.