Board Attributes, Audit Committee Composition and Financial Reporting Quality of Commercial Banks in Nigeria
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Abstract
The aim of this paper is to assess the impact of board attributes and the audit committee on financial reporting quality among the commercial banks in Nigeria. Secondary data of published annual reports from 20 commercial banks were collected, analysed and interpreted using the content analyses technique covering ten year periods from 2010 to 2019.The model adopted for the study is Modified Jones model due to its robustness in computing discretionary accruals (Earnings Management) which serves as a proxy of financial reporting quality. Additionally, the Ordinary Least Square (OLS) regression technique was also adopted in the analysis of this study. The findings derived from this study indicate that audit committee with sufficient independent members has a positive impact in reducing earnings management and consequently improving the reporting quality. Similarly, positive impact of the size of the board on the reporting quality has been recorded. Subsequently, the findings also demonstrate that the composition of the board has a positive impact on the reporting quality. The study thus concludes that audit committee composition has an effect on the overall quality of financial reports in commercial banks in Nigeria. The paper therefore, emphasizes the on the need to fortify the composition and task of the audit committee principally in the supervision function on the financial statements in order to enhance the financial statement quality. The composition and size of the board members of banks in Nigeria should be upgraded. In addition, the board should be empowered to exercise a more vital function in financial statement process.
Keywords
Annual Reports, Audit Committee Composition, Board Attributes, Financial Reporting Quality
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