Impact of Audit Committee Attributes on Financial Reporting Quality of Deposit Money Banks in Nigeria
Abstract
The audit committee is one of the corporate governance mechanisms vested with the responsibility of monitoring the financial reporting process of corporations. This paper examines the impact of audit committee attributes of expertize, meeting frequency, independence, attendance and size on financial reporting quality of deposit money banks in Nigeria. Top ten banks based on asset capitalization were sampled during the period 2008-2017. Data was extracted from their annual report and analysed using pooled OLS regression and the Fixed effect test. Firm age and firm size were introduced as control variables in the regression model. The result of the analysis shows that audit committee attributes of attendance and independence has negative and statistically insignificant impact on financial reporting quality of deposit money banks in Nigeria while audit committee attributes of size and meeting frequency has positive and statistically insignificant influence on financial reporting quality. However only audit committee attribute of expertise seems to be positive and statistically significant at influencing financial reporting quality of deposit money banks in Nigeria. Firm age and size were also found to be positive and statistically significant at influencing financial reporting quality of deposit money banks in Nigeria. The paper recommends among others that regulatory bodies like the Financial Reporting Council of Nigeria (FRCN) and the Central bank of Nigeria being the apex bank should make it a policy for banks to ensure that appointment of members of the audit committee is based on expertise that is, members of the committee must possess relevant knowledge in accounting and belong to a professional body of accounting.
Keywords: Audit committee, Expertise, Attendance, Meeting frequency, Independence, Size, Financial Reporting Quality.
DOI: 10.7176/RJFA/10-4-04
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