Panel Analysis of Audit Committee Characteristics and Financial Statement Fraud Likelihood in Nigerian Deposit Money Banks
Abstract
This study examines the effect of audit committee characteristics on the financial statement fraud likelihood of listed deposit money banks in Nigeria over the period 2015 to 2025. Specifically, the study investigates the influence of audit committee size, independence, financial expertise, and meeting frequency on fraud likelihood measured using the Beneish M-Score model. The study adopts an ex-post facto research design and utilizes panel data techniques, including Fixed Effects, Random Effects, and System Generalized Method of Moments (Sys-GMM), to address endogeneity issues. The findings reveal that audit committee independence and financial expertise significantly reduce financial statement fraud likelihood, while audit committee size and meeting frequency exhibit negative but less significant effects. Additionally, leverage increases fraud risk, whereas profitability reduces it. The study concludes that effective audit committee composition is essential for enhancing financial reporting integrity and recommends strengthening independence and expertise requirements in Nigerian banks.
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