Effect of Audit Committee Characteristics on Auditors
Efficiency of Conglomerate Firms in Nigeria

Ofor; Nkechi Theresa (Ph.D); Orjinta; Hope Ifeoma (Ph.D); Mayah; Eunice

Effect of Audit Committee Characteristics on Auditors Efficiency of Conglomerate Firms in Nigeria

Ofor, Nkechi Theresa (Ph.D), Orjinta, Hope Ifeoma (Ph.D) & Mayah, Eunice

Abstract

This paper examined the effect of audit committee characteristics on auditors efficiency of all conglomerate firms quoted in Nigerian Exchange Group (NGX). A sample of 5 listed firms was used for the period of ten years spanning 2011 to 2020. Auditors’ efficiency was taken as our dependent variable and was measured as a dummy variable 1 if the firm is audited by any of the BIG4 audit firms and 0 if otherwise while audit committee characteristics was taken as our independent variable proxied using audit committee independence, audit committee gender diversity, audit committee financial expertise and audit committee diligence. The study was predicated on ex post facto research design and used secondary data for the analysis. The secondary sources of data were collected from annual reports of the selected conglomerate firms and four (4) specific objectives and hypotheses were subjected to some preliminary data tests such as descriptive statistics and Variance inflation factor and was analyzed using panel regression analysis taking cognizance of hausman effects tests. The result revealed that there is a significant positive relationship between audit committee independence, audit committee financial expertise and auditors efficiency which was statistically significant at 5% levels of significance respectively while an insignificant effect was documented against audit committee diligence and auditors efficiency. Generally, the findings showed that 59% of changes in the auditors efficiency of conglomerate firms can be attributed to the audit committee characteristics while about 41% were unaccounted for hence captured by the stochastic error term. The study recommends among others, that conglomerate firms’ audit committees should be constituted by independent persons with high level of integrity that can match words with action to improve auditors efficiency and also enable them perform their oversight functions effectively and ensure that audit committee members meet fre

Keywords

Auditors efficiencyaudit committee characteristicsconglomerate firmsNigeria

References

Agyemang-Mintah&Schadewitz, H. (2017). Audit committee adoption and firm value: Evidence from UK financial institutions.International Journal of Accounting & Information Management 26(3). Al Farooque, O., Buachoom, W., & Sun, L. (2019). Board, audit committee, ownership and financial performance–emerging trends from Thailand. Pacific Accounting Review. Al-Mamun, A., Yasser, Q.R., Rahman, M.A., Wickramasinghe, A., & Nathan, T.M. (2014). Relationship between audit committee characteristics, external auditors and economic value added (EVA) of public listed firms in Malaysia. Corporate Ownership & Control, 12(1), 899-910. Al-Okaily, J., &Naueihed, S. (2019). Audit committee effectiveness and family firms: Impact on performance. Management Decision. Alqatamin, R.M. (2018). Audit committee effectiveness and company performance: Evidence from Jordan. Accounting and Finance Research, 7(2), 48. Ajili, H., &Bouri, A. (2018). Corporate governance quality of Islamic banks: measurement and effect on financial performance. International Journal of Islamic and Middle Eastern finance and management. Bansal, N., & Sharma, A.K. (2016). Audit committee, corporate governance and firm performance: Empirical evidence from India. International Journal of Economics and Finance, 8(3), 103. Bhuiyan, M.B.U., &D’Costa, M. (2020). Audit committee ownership and audit report lag:evidence from Australia. International Journal of Accounting & Information Management. Bin-Ghanem, H., &Ariff, A.M. (2016). The effect of board of directors and audit committee effectiveness on internet financial reporting. Journal of Accounting in Emerging Economies. Eyenubo, S. A., Mohammed, M., & Ali, M. (2017). Audit committee effectiveness of financial reporting quality in listed companies in Nigeria stock exchange. International Journal of Academic Research in Business and Social Sciences, 7(6), 487-505. Garas, S., &ElMassah, S. (2018). Corporate governance and corporate social responsibility disclosures. Critical perspectives on international business. Haddad, A., El Ammari, A. &Abdelfattah, B. (2021). Impact of audit committee quality on the financial performance of conventional and islamic banks. Journal of Risk Financial Management 14: 176. Harris, Mary Kathleen, & L. Tyler Williams.(2020). Audit quality indicators: Perspectives from Non-Big Four audit firms and small company audit committees. Advances in Accounting 50: 100-485 Ibrahim, G., Mansor, N., &Nasidi, M. (2020). Mediating effect of audit commit independence on the link between firms internal governance tunneling from real earnings management. International Journal of Academic Research in Business and Social Sciences, 10(2), 195– 211. Juhmani, O.I. (2017). Audit committee characteristics and earnings management: The case of Bahrain. International Journal of Accounting and Financial Reporting, 7(1), 11-31. Mardnly, Z., Mouselli, S., &Abdulraouf, R. (2018). Corporate governance and firm performance: Empirical evidence from Syria. International Journal of Islamic and Middle Eastern Finance and Management. Namakavarani, O. M, Daryaei, A. A.,Askarany, D. &Askary, S. (2021). Audit committee characteristics and quality of financial information: The role of the internal information environment and political connections. Journal of risk and financial management 14: 273-291. Orjinta, H. I. &Ikueze, N. E. (2018). Effect of audit committee characteristics on performance of non-financial firms: Evidence from a recessed economy. International Journal of Innovation and Applied Studies, 24(1), 289-298 Puni, A., &Anlesinya, A. (2020). Corporate governance mechanisms and firm performance in a developing country. International Journal of Law and Management. Qeshtaa, M., & Ali, B.J., (2020). The moderating effect of the effectiveness of the audit committee between ownership concentration and intellectual capital disclosures among companies in gulf co-operation council. International Journal of Psychosocial Rehabilitation, 24(1), 5979-5986. Qeshta, M. H., Abu Alsoud, G. F.,Hezabr, A.A. , Ali, B. J.A.&Oudat, M. S. (2021). Audit committee characteristics and firm performance: Evidence from the insurance sector in Bahrain. Geintec journals, 11(2), 1666-1680 Ratna J. S. T &Bambang, H. (2020) Influence of audit committee and internal audit on audit report lag: Size of public accounting firm as a moderating variable. International journal of research in business and social science, 9(1), 137-142 Samoei, R.K., &Rono, L. (2016).Audit committee size, experience and firm financial performance. Evidence Nairobi Securities Exchange, Kenya

Effect of Audit Committee Characteristics on Auditors Efficiency of Conglomerate Firms in Nigeria

Abstract

Keywords

References

More Articles from IIARD INTERNATIONAL JOURNAL OF ECONOMICS AND BUSINESS MANAGEMENT