ATTRIBUTES OF AUDIT COMMITTEE MEMBERS AND QUALITY OF FINANCIAL REPORTING IN BANKS IN NIGERIA
ATTRIBUTES OF AUDIT COMMITTEE MEMBERS AND QUALITY OF FINANCIAL REPORTING IN BANKS IN NIGERIA
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Date
2012-04
Authors
SAMUEL, GABRIEL
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Abstract
ABSTRACT
This research investigated the impact of audit committees attributes on financial
reporting quality of Banks in Nigeria. Modified Jones model (1991) provided the
measures of earnings quality, which were used to proxy for financial reporting quality.
The audit committee attributes investigated were: independence, financial expertise,
frequency of meetings, and multiple directorship. The population of our study is all the
twenty-two (22) quoted banks on the Nigerian Stock Exchange as at 31st December, 2010
filtered to eleven (11) banks considering only banks declared healthy by the CBN and
having the relevant data required for the study. Secondary data were used obtained from
secondary sources, i.e., annual reports and returns filed with SEC. The research design
used is correlation research design. The effectiveness of Audit committee attributes is one
of the significant themes in corporate governance debates. We contribute to the debate by
examining empirically whether audit committee attributes are associated with financial
reporting quality in Nigerian banks. By using a measure of financial reporting quality,
Jones (1991) model this study is one of the few studies that overcome the imprecision
inherent in the abnormal accruals/earnings management. We show that after controlling
for bank size and bank market penetration, the percentage of audit committee members
having financial expertise is positively related to financial reporting quality. We also find
some evidence of a positive relationship between the independence, frequency of meeting
and multiple directorship of the audit committee and financial reporting quality. We also
verify that our results are robust across the measures of financial reporting quality. Our
results suggest that mandating greater expertise on audit committees rather than simply
requiring one expert on the audit committee may be beneficial to investors. We equally
suggested training and re-training of audit committee members to guarantee meaningful
contributions.
Description
BEING A THESIS SUBMITTED TO THE POSTGRADUATE SCHOOL OF
AHMADU BELLO UNIVERSITY, ZARIA, IN PARTIAL FULFILMENT OF
THE REQUIREMENTS FOR THE AWARD OF MASTER OF SCIENCE
(M.Sc.) DEGREE IN ACCOUNTING AND FINANCE.
Keywords
ATTRIBUTES,, AUDIT,, COMMITTEE,, MEMBERS,, QUALITY,, FINANCIAL,, REPORTING,, BANKS,, NIGERIA