EFFECT OF AUDIT COMMITTEE INDEPENDENCE ON FINANCIAL REPORTING QUALITY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA
Taiya Haziel Mbasiti, PhD, Solomon Pwagusadi Joyce, PhD, John Iliya and Sakiyo Daniel Godfrey
Volume 6 Issue 1
Abstract
This study examined the effect of audit committee independence on the financial reporting quality of listed deposit money banks in Nigeria. Specifically, it investigated the effects of the proportion of non-executive directors, audit committee size and audit committee meeting frequency on financial reporting quality. An ex-post facto research design was adopted. The population comprised 20 listed deposit money banks, from which 14 banks were purposively selected on the basis of data availability. Secondary data were obtained from the audited annual reports and accounts of the sampled banks for the period 2016–2025, producing 140 firm-year observations. Financial reporting quality was measured using discretionary accruals estimated through the Modified Jones Model. Bank Size, leverage and return on assets were introduced as control variables. The data were analysed using descriptive statistics, Pearson correlation and panel multiple regression. The Hausman specification test supported the fixed-effects model. The results revealed that proportion of non-executive directors has a positive but insignificant effect on financial reporting quality, audit committee size has a negative and significant effect, whereas audit committee meeting frequency had a positive and significant effect. The study recommends that listed deposit money banks should strengthen substantive independence, maintain efficiently sized audit committees and hold regular, purposeful meetings beyond the regulatory minimum. Keywords: Audit Committee Independence, Financial Reporting Quality, Non-Executive Directors, Audit Committee Size, Meeting Frequency
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