Effect of Audit Committee Expertise on the Relationship between Audit Quality and Earnings Management of Consumer Goods Firms in Nigeria

  • Mohammed Bamanga Bello Federal University of Lafia, Nasarawa State
  • Timothy Terver Ugoh Nasarawa State University, Keffi, Nasarawa State
Keywords: Moderating Effect, Audit Quality, Audit Fees, Real Earnings, Consumer Goods


The collapse of high profiled companies was mainly due to the manipulation of accounting figures reported in their published financial statements and considering the danger associated with this problem, this study examines the moderating effect of audit committee financial expertise on the relationship between audit quality and real earnings management of quoted consumer goods companies in Nigeria. Real earnings management as dependent variable was proxied by discretionary accruals while audit quality as independent variable is explained using audit fees and auditor industry specialization. The study used secondary data were used by extracting from the annual reports of the consumer goods of 21 companies quoted on the Nigerian stock exchange out of which 17 were sampled through filtering process for the purpose of data collection from 2010 to 2019. The study employs Pooled OLS regression techniques to analyze the data. The result of the study shows that both audit fees and auditor industry specialization have positive and significant relationship with real earnings management when moderated by audit committee financial expertise. The study concludes that both variables can be used as determinants of real earnings management when there is a finance expert in the audit committee. The study recommends that efforts should be made with respect to legislations mandating audit committees to have more financial accounting experts among its members since it is viable corporate governance tool towards enhancing quality and reliable financial reporting.  

Author Biographies

Mohammed Bamanga Bello, Federal University of Lafia, Nasarawa State

Department of Accounting

Timothy Terver Ugoh, Nasarawa State University, Keffi, Nasarawa State

Department of Accounting