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Audit Fees and Industry Specialization on Earnings Management of Listed Group Manufacturing Companies in Nigeria. Does Firm Size Matter?

Baba Hassan Ph.D

Abstract

This study examined the moderating effect of firm size on the relationship between auditor attributes and earnings management of listed group manufacturing companies in Nigeria. Using an ex-post factor design, annual financial report was collected from 25 group manufacturing companies in Nigeria from the period of 2014 to 2024. Analyses were carried out involving the multiply regression within the framework of STATA 13. The study demonstrate that firm size does not play a moderating role in the relationship between audit firm fees and earnings management among listed group manufacturing companies in Nigeria. The study also revealed that firm size strengthens the relationship between audit specialization and earnings management. Based on the results, the study recommends that the regulators and standard- setting bodies should focus on enhancing and maintaining rigorous audit quality standards applicable to all companies, irrespective of their size. Also, policymakers should encourage companies to engage the service of audit specialization due to the knowledge and skills for the work. This recommendation aligns with the finding that audit specialization is associated with a reduction in earnings management.

References

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