IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 10 NO. 8 2024
DOI: 10.56201/jafm.v10.no8.2024.pg142.165

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Determinants of Financial Reporting Quality of Listed Firms in Nigeria

Inifiok Iniubong AKPABIO & Joseph U. B. AZUBIKE

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Abstract

The study examined the determinants of financial reporting quality of listed firms in Nigeria. To achieve the objective of the study, ex-post facto research design was adopted. The data were collected through secondary source from annual report and accounts of the selected firms in Nigeria. The population of the study is made up of 55 listed firms while the sample size is 20 selected firms in Nigeria. The data collected were analyzed using panel data based-multiple regression analysis and moderated regression analysis. The result of the first hypothesis revealed that litigation risk has a significant effect on financial reporting quality of listed firms in Nigeria. The result of the second hypothesis revealed that risk of investor distrust has a significant effect on financial reporting quality of listed firms in Nigeria. The result of the third hypothesis revealed that default risk has no significant effect on financial reporting quality of listed firms in Nigeria. The result of the fourth hypothesis revealed that audit committee's legal expertise moderates the relationship between litigation risk, risk of investor distrust, default risk, and financial reporting quality of listed firms in Nigeria. Based on the results, the study recommends to the investors that before taking investment decisions in a company, they should prefer a company that has used industry auditor specialization because with the existence of industry specialization, auditors can limit the practice of earnings management that occurs in a company. This study encourages regulators in Nigeria to ensure that investors are confident and trust the quality of the financial reporting. The study further recommends that there is need for companies to employ risk management experts that would help their companies in managing risk and avoid any form of default risk that would negatively affect financial reporting quality of the company.

keywords:

Audit committee, Default risk, Reporting, Investor distrust, Litigation risk

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