Moderator Effect of Audit Committee on Earnings Management and Board Diversity

Abstract

This study examined the effect of board diversity, audit committee and earnings management of oil and gas (o&g) companies listed in Nigeria stock exchange. Female directors and foreign directors served as proxies for board diversity, audit committee independence and meeting frequency were moderating variables to study possible discretionary accruals in earnings. Eleven o&g companies in Nigeria that were listed that had consistently produced audited yearly financial reports from 2009 to 2019 were employed to accomplish the study's goals. Regression models with fixed and random effects were utilised in the investigation. The outcome showed that earnings management and the board diversity of listed o&g companies in Nigeria was moderated by the audit committee. The findings suggested that Nigerian-listed oil and gas businesses should give a gender quota for female directors. It is advised that regulators consider the number of meetings that audit committees hold, as it is the members' intelligence to comprehend the financial ramifications of management decisions rather than meeting frequency that determines the monitoring of managers' opportunistic attitudes.

Audit committee characteristics and firm performance: a cross-country meta-analysis

“…The PCAOB (2023) has stated that audit committees should be composed of independent directors with financial expertise and sufficient time to devote to their duties. These are also in line with the recommendations of Ibrahim et al . (2023), who emphasizes the importance of selecting audit committee members based on their intelligence and financial acumen rather than merely focusing on meeting frequency.…”

“…The PCAOB (2023) has stated that audit committees should be composed of independent directors with financial expertise and sufficient time to devote to their duties. These are also in line with the recommendations of Ibrahim et al (2023), who emphasizes the importance of selecting audit committee members based on their intelligence and financial acumen rather than merely focusing on meeting frequency. This suggests that organizations should prioritize the recruitment of audit committee members with the requisite expertise, independence and qualifications to effectively comprehend and assess the financial implications of management decisions.…”