Audit Committee: Size, Independence and Environmental Disclosure of Non-Finance Service Companies in Nigeria: The Moderating Role of Audit Committee Share Ownership

Abstract

This study examined the effect of audit committee size and audit committee independence on environmental disclosure of non-finance service companies listed in Nigeria. Extant literature on this topic is more in developed countries where legal regulatory framework exists. There are limited empirical studies in developing countries like Nigeria that examine the effect audit committee size and independence on environmental disclosure, measured with Global Reporting Initiative checklist and their results have wide variant. Secondary data were collected from the annual reports of the sampled companies. 58 companies out of the population of 89 listed non-financial companies in Nigeria were sampled out. Descriptive statistics and multiple regression were employed for analysis. The study finds that the direct effect of audit committee size and audit committee independence on environmental disclosure is insignificant with probability values of 0.154 and 0.107, respectively. However, when moderated by audit committee share ownership, the effect of audit committee size on environmental disclosure of the sampled companies become significant with Probability value of 0.049. This finding suggests that audit committee size has positive and significant effect on environmental disclosure of non-finance companies listed in Nigeria where members of audit committee has shares in the company.  Based on the findings, the study recommends that regulatory authorities should encourage companies to select members of audit committee with share ownership in the companies because it influences the effect of AC size on environmental disclosure.

Keywords: Environmental disclosure, audit committee size, audit committee independence, audit committee share ownership, non-financial service companies, Nigeria

DOI: 10.7176/RJFA/12-8-03

Publication date: April 30^th 2021