Effects of Audit Committee Diversity on Financial Reporting Quality among Consumer Goods Companies in Nigeria
Keywords:
audit committee, audit committee diversity, interfinancial reporting quality, gender diversityAbstract
This study looked at the effect of gender diversity on financial reporting performance on audit committees. All twenty (20) consumer goods companies listed on the Nigerian Stock Exchange are included in the current study demographic. From 2009 to 2019, the study used a purposive sampling methodology to classify all thirteen (13) consumer goods companies that published annual periodic reports. The study utilizes STATA 15 tools to analyse evidence and clinical methods like heteroskedasticity and multicollinearity. After that, regression analysis was used to look into the effect of audit committee diversity on financial reporting performance. The analysis revealed that having a diverse audit committee increases financial reporting performance. As a consequence, the findings suggest that the makeup of audit committees be managed to ensure gender diversity in order to increase monitoring performance
References
Abbott, L. J., Parker, S., & Peters, G. F. (2004). Audit committee characteristics and restatements. Auditing. A Journal of Practice & Theory, 23(1), 69-87.
Abbott, L. J., Young, P. & Susan P. (2000). The effects of audit committee activity and independence on corporate fraud. Managerial Finance, 26(11), 55-68.
Abdelfatah, M. Alrshah1 & Faudziah, H. F. (2015). The impact of audit committee characteristics on reliability os audited financial statements: A mediating role of external auditor quality. The 11th Asian Academy of Management International Conference (AAM2015), 2-4 Oct 2015, Penang, Malaysia
Akeju, J. B., & Babatunde, A. A. (2017). Corporate governance and financial reporting quality in Nigeria. International Journal of Information Research and Review, 4(2), 3749-3753.
Aldaoud, K. A. M. (2015). The influence of corporate governance and ownership concentration on the timeliness of financial reporting in Jordan (Doctoral dissertation, Universiti Utara Malaysia).
Al-Matari, Y. A., Homaid, A. A., & Alaaraj, H. (2016). The influence of audit committee effectiveness on banks’ performance in Yemen. International Journal of Economics and Financial Issues, 6(4), 1424-1428.
Al-Shaer, H., Salama, A. & Toms, S. (2017). Audit committees and financial reporting quality: Evidence from UK environmental accounting disclosures. Journal of Applied Accounting Research, 18(1), 2-21.
Barth, M. E., Landsman, W. R., & Lang, M. H. (2008). International accounting standards and accounting quality. Journal of accounting research, 46(3), 467-498.
Beasley, M. S. (1996). An empirical analysis of the relation between the board of director composition and financial statement fraud. Accounting review, 443-465.
Beest, F. V., Braam, G. J. M., & Boelens, S. (2009). Quality of Financial Reporting: measuring qualitative characteristics.
Bernardi, R. A., Bean, D. F., & Weippert, K. M. (2005). Minority membership on boards of directors: A case for requiring pictures of boards in annual reports. Critical Perspectives on Accounting, 16(8), 1019-1033
Biddle, G. C., Hilary, G., & Verdi, R. S. (2009). How does financial reporting quality relate to investment efficiency? Journal of accounting and economics, 48(2-3), 112-131.
Bilic, I. & Sustic, I. (2011). Influence of ethics education on management and entrepreneurship students attitude toward ethical behavior: case of Croatia. The Business Review, Cambridge, 17(2), 197-204.
Burgess, Z. & Tharenou, P. (2002). Women board directors: characteristics of the few. Journal of Business Ethics, 37 (1), 39-50.
Davidson, R., Goodwin‐Stewart, J., & Kent, P. (2005). Internal governance structures and earnings management. Accounting & Finance, 45(2), 241-267.
Davidson, R., Goodwin‐Stewart, J., & Kent, P. (2005). Internal governance structures and earnings management. Accounting & Finance, 45(2), 241-267.
Dechow, P. M., & Dichev, I. D. (2002). The quality of accruals and earnings: The role of accrual estimation errors. The accounting review, 77(s-1), 35-59.
Dennis, M.R., Adrianne, D., & Kunkel, P. N. (2004). Perceptions of Men, Women, and CEOs: the Effects of Gender Identity. Social Behavior and Personality, 32(2), 155-173.
Dimitrova, J. (2012). Problems with the implementation of international standards for financial reporting and international audit standards. In Challenges in Contemporary Economy, IBS Press, 22-23.06.2012, International Business School Botevgrad, Bugarija.
Erhardt, N. L., Werbel, J. D., & Shrader, C. B. (2003). Board of director diversity and firm financial performance. Corporate governance: An international review, 11(2), 102-111.
Eriabie, S. O. & lzedonmi, F. (2016). Impact of audit committee attributes on financial reporting quality in Nigerian quoted companies. ICAN Journal of Accounting and Finance, 5(1).
Ewert, R. & Wagenhofer, A. (2010). Earnings quality metrics and what they measure. Working Paper, University of Graz.
Eyenubo, S. A., Mudzamir, 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).
Fama, E. F., & Jensen, M. C. (1983). Agency problems and residual claims. The journal of law and Economics, 26(2), 327-349.
Faraj, S. K., & Akbar, S. (2010). An empirical investigation of the Libyan audit market: perceptions of auditor's independence. Journal for Global Business Advancement, 3(2), 133-154.
Grosvold, J., Brammer, S. & Rayton, B. (2007). Board diversity in the United Kingdom and Norway: an exploratory analysis”, Business Ethics. An European Review, 16(4), 344-57
Gujarati and Porter (2009)
Halpern, D.F. (2000). Sex Differences in Cognitive Abilities. Erlbaum, London.
Hassan, S. U. (2013). Financial Reporting Quality, Does Monitoring Characteristics Matter? An Empirical Analysis of Nigerian Manufacturing Sector. The Business & Management Review, 3(2), 147.
Hilary, G. & Hsu, C. (2011). Endogenous Overconfidence in Managerial Forecasts. Journal of Accounting & Economics, 51(3), 300 – 313
Huang, H. W. Yan, Y. C., Fornaro, J. M., & Elshahat, A. (2011). Market reactions to audit committee director's gender: Evidence from US-traded foreign firms. International Journal of Banking and Finance, 8(1), 4
Huse, M., & Solberg, A. G. (2006). Gender-related boardroom dynamics: How Scandinavian women make and can make contributions on corporate boards. Women in management review, 21(2), 113-130.
Islam, M. Z., Islam, M. N., Bhattacharjee, S., & Islam, A. K. M. Z. (2010). Agency problem and the role of audit committee: Implications for corporate sector in Bangladesh. International journal of Economics and Finance, 2(3), 177-188.
Ittonen, K., Miettinen, J. & Vahamaa, S. (2009). Does female representation in audit committees affect audit fees? Working Paper Series, available at: SSRN: http://papers.ssrn.com/sol3/ papers.cfm?abstract_id¼1314243
Jensen, M., & Meckling, W. (1976). Theory of the firm: Management behavior, agency costs and capital structure. Journal of financial economics, 3(4), 305-60.
Johnson, V. E., Khurana, I. K., & Reynolds, J. K. (2002). Audit‐firm tenure and the quality of financial reports. Contemporary Accounting Research, 19(4), 637-660.
Klein, A. (2002). Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics, 33(3), 375-400.
Ling, Z. (2012). Individual manager s, financial reporting and the managerial labor market. dissertation, University of Iowa, http://iruiowa edu/etd/3339.
Mbobo, E. M., & Adebimpe, O. (2016). the influence of audit committee attributes on the quality of financial reporting evidence from Nigerian banks. International journal of economics, commerce and management, 1(1), 116-142.
Moses, T., Ofurum, C. O. & Egbe, S. (2016). Audit committee characteristics and quality of financial reporting in quoted Nigerian banks. International Journal of Advanced Academic Research, 2(5), 1-8
Oradi, J., & Izadi, J. (2019). Audit committee gender diversity and financial reporting: evidence from restatements. Managerial Auditing Journal.
Osemene, O. F., & Fakile, O. G. (2018). Effectiveness of Audit Committee and Financial Performance of Deposit Money Banks in Nigeria. Fountain University Osogbo Journal of Management, 3(3).
Peni, E. and Vahamaa, S. (2010). Female executives and earnings management. Managerial Finance, Patrington, 36(7),. 629-45
Qi, B., & Tian, G. (2012). The impact of audit committees personal characteristics on earnings management: Evidence from China. Journal of Applied Business Research (JABR), 28(6), 1331-1344.
Salawu. M.O., Okpanachi, J,Yahaya,O. A. & Dikki,C . A. (2017) Effect of Audit committee independent on audit quality of listed consumer goods companies in Nigeria. International Journal of Education and Research,5 (11) 47-62
Shawver, T.J., Bancroft, P.C. & Sennetti, J. T. (2006). Can the clan effect reduce the gender sensitivity to fraud? The case of the IPO environment. Journal of Forensic Accounting, 7(1), 185-208.
Song, J., & Windram, B. (2004). Benchmarking audit committee effectiveness in financial reporting. International Journal of Auditing, 8(3), 195-205.
Turley, S., & Zaman, M. (2004). The corporate governance effects of audit committees. Journal of management and governance, 8(3), 305-332.
Uadiale, O. (2012). Earnings management and corporate governance in Nigeria.
Ud Din, N., Cheng, X., Ahmad, B., Sheikh, M. F., Adedigba, O. G., Zhao, Y., & Nazneen, S. (2020). Gender diversity in the audit committee and the efficiency of internal control and financial reporting quality. Economic Research-Ekonomska Istraživanja, 1-20.
Wardhani, R., & Joseph, H. (2010). Karakteristik pribadi komite audit dan praktik manajemen laba. Simposium Nasional Akuntansi XIII, 1-26.
Warren, C. S., & Reeve, J. M. (2004). Financial Accounting for Future Business Leaders. South-Western Pub.
Xie, B., Davidson III, W. N., & DaDalt, P. J. (2003). Earnings management and corporate governance: the role of the board and the audit committee. Journal of corporate finance, 9(3), 295-316.
Yusoff, W. F. W. (2010). Characteristics of boards of directors and board effectiveness: a study of Malaysian public listed companies (Doctoral dissertation, Victoria University).
Abbott, L. J., Young, P. & Susan P. (2000). The effects of audit committee activity and independence on corporate fraud. Managerial Finance, 26(11), 55-68.
Abdelfatah, M. Alrshah1 & Faudziah, H. F. (2015). The impact of audit committee characteristics on reliability os audited financial statements: A mediating role of external auditor quality. The 11th Asian Academy of Management International Conference (AAM2015), 2-4 Oct 2015, Penang, Malaysia
Akeju, J. B., & Babatunde, A. A. (2017). Corporate governance and financial reporting quality in Nigeria. International Journal of Information Research and Review, 4(2), 3749-3753.
Aldaoud, K. A. M. (2015). The influence of corporate governance and ownership concentration on the timeliness of financial reporting in Jordan (Doctoral dissertation, Universiti Utara Malaysia).
Al-Matari, Y. A., Homaid, A. A., & Alaaraj, H. (2016). The influence of audit committee effectiveness on banks’ performance in Yemen. International Journal of Economics and Financial Issues, 6(4), 1424-1428.
Al-Shaer, H., Salama, A. & Toms, S. (2017). Audit committees and financial reporting quality: Evidence from UK environmental accounting disclosures. Journal of Applied Accounting Research, 18(1), 2-21.
Barth, M. E., Landsman, W. R., & Lang, M. H. (2008). International accounting standards and accounting quality. Journal of accounting research, 46(3), 467-498.
Beasley, M. S. (1996). An empirical analysis of the relation between the board of director composition and financial statement fraud. Accounting review, 443-465.
Beest, F. V., Braam, G. J. M., & Boelens, S. (2009). Quality of Financial Reporting: measuring qualitative characteristics.
Bernardi, R. A., Bean, D. F., & Weippert, K. M. (2005). Minority membership on boards of directors: A case for requiring pictures of boards in annual reports. Critical Perspectives on Accounting, 16(8), 1019-1033
Biddle, G. C., Hilary, G., & Verdi, R. S. (2009). How does financial reporting quality relate to investment efficiency? Journal of accounting and economics, 48(2-3), 112-131.
Bilic, I. & Sustic, I. (2011). Influence of ethics education on management and entrepreneurship students attitude toward ethical behavior: case of Croatia. The Business Review, Cambridge, 17(2), 197-204.
Burgess, Z. & Tharenou, P. (2002). Women board directors: characteristics of the few. Journal of Business Ethics, 37 (1), 39-50.
Davidson, R., Goodwin‐Stewart, J., & Kent, P. (2005). Internal governance structures and earnings management. Accounting & Finance, 45(2), 241-267.
Davidson, R., Goodwin‐Stewart, J., & Kent, P. (2005). Internal governance structures and earnings management. Accounting & Finance, 45(2), 241-267.
Dechow, P. M., & Dichev, I. D. (2002). The quality of accruals and earnings: The role of accrual estimation errors. The accounting review, 77(s-1), 35-59.
Dennis, M.R., Adrianne, D., & Kunkel, P. N. (2004). Perceptions of Men, Women, and CEOs: the Effects of Gender Identity. Social Behavior and Personality, 32(2), 155-173.
Dimitrova, J. (2012). Problems with the implementation of international standards for financial reporting and international audit standards. In Challenges in Contemporary Economy, IBS Press, 22-23.06.2012, International Business School Botevgrad, Bugarija.
Erhardt, N. L., Werbel, J. D., & Shrader, C. B. (2003). Board of director diversity and firm financial performance. Corporate governance: An international review, 11(2), 102-111.
Eriabie, S. O. & lzedonmi, F. (2016). Impact of audit committee attributes on financial reporting quality in Nigerian quoted companies. ICAN Journal of Accounting and Finance, 5(1).
Ewert, R. & Wagenhofer, A. (2010). Earnings quality metrics and what they measure. Working Paper, University of Graz.
Eyenubo, S. A., Mudzamir, 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).
Fama, E. F., & Jensen, M. C. (1983). Agency problems and residual claims. The journal of law and Economics, 26(2), 327-349.
Faraj, S. K., & Akbar, S. (2010). An empirical investigation of the Libyan audit market: perceptions of auditor's independence. Journal for Global Business Advancement, 3(2), 133-154.
Grosvold, J., Brammer, S. & Rayton, B. (2007). Board diversity in the United Kingdom and Norway: an exploratory analysis”, Business Ethics. An European Review, 16(4), 344-57
Gujarati and Porter (2009)
Halpern, D.F. (2000). Sex Differences in Cognitive Abilities. Erlbaum, London.
Hassan, S. U. (2013). Financial Reporting Quality, Does Monitoring Characteristics Matter? An Empirical Analysis of Nigerian Manufacturing Sector. The Business & Management Review, 3(2), 147.
Hilary, G. & Hsu, C. (2011). Endogenous Overconfidence in Managerial Forecasts. Journal of Accounting & Economics, 51(3), 300 – 313
Huang, H. W. Yan, Y. C., Fornaro, J. M., & Elshahat, A. (2011). Market reactions to audit committee director's gender: Evidence from US-traded foreign firms. International Journal of Banking and Finance, 8(1), 4
Huse, M., & Solberg, A. G. (2006). Gender-related boardroom dynamics: How Scandinavian women make and can make contributions on corporate boards. Women in management review, 21(2), 113-130.
Islam, M. Z., Islam, M. N., Bhattacharjee, S., & Islam, A. K. M. Z. (2010). Agency problem and the role of audit committee: Implications for corporate sector in Bangladesh. International journal of Economics and Finance, 2(3), 177-188.
Ittonen, K., Miettinen, J. & Vahamaa, S. (2009). Does female representation in audit committees affect audit fees? Working Paper Series, available at: SSRN: http://papers.ssrn.com/sol3/ papers.cfm?abstract_id¼1314243
Jensen, M., & Meckling, W. (1976). Theory of the firm: Management behavior, agency costs and capital structure. Journal of financial economics, 3(4), 305-60.
Johnson, V. E., Khurana, I. K., & Reynolds, J. K. (2002). Audit‐firm tenure and the quality of financial reports. Contemporary Accounting Research, 19(4), 637-660.
Klein, A. (2002). Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics, 33(3), 375-400.
Ling, Z. (2012). Individual manager s, financial reporting and the managerial labor market. dissertation, University of Iowa, http://iruiowa edu/etd/3339.
Mbobo, E. M., & Adebimpe, O. (2016). the influence of audit committee attributes on the quality of financial reporting evidence from Nigerian banks. International journal of economics, commerce and management, 1(1), 116-142.
Moses, T., Ofurum, C. O. & Egbe, S. (2016). Audit committee characteristics and quality of financial reporting in quoted Nigerian banks. International Journal of Advanced Academic Research, 2(5), 1-8
Oradi, J., & Izadi, J. (2019). Audit committee gender diversity and financial reporting: evidence from restatements. Managerial Auditing Journal.
Osemene, O. F., & Fakile, O. G. (2018). Effectiveness of Audit Committee and Financial Performance of Deposit Money Banks in Nigeria. Fountain University Osogbo Journal of Management, 3(3).
Peni, E. and Vahamaa, S. (2010). Female executives and earnings management. Managerial Finance, Patrington, 36(7),. 629-45
Qi, B., & Tian, G. (2012). The impact of audit committees personal characteristics on earnings management: Evidence from China. Journal of Applied Business Research (JABR), 28(6), 1331-1344.
Salawu. M.O., Okpanachi, J,Yahaya,O. A. & Dikki,C . A. (2017) Effect of Audit committee independent on audit quality of listed consumer goods companies in Nigeria. International Journal of Education and Research,5 (11) 47-62
Shawver, T.J., Bancroft, P.C. & Sennetti, J. T. (2006). Can the clan effect reduce the gender sensitivity to fraud? The case of the IPO environment. Journal of Forensic Accounting, 7(1), 185-208.
Song, J., & Windram, B. (2004). Benchmarking audit committee effectiveness in financial reporting. International Journal of Auditing, 8(3), 195-205.
Turley, S., & Zaman, M. (2004). The corporate governance effects of audit committees. Journal of management and governance, 8(3), 305-332.
Uadiale, O. (2012). Earnings management and corporate governance in Nigeria.
Ud Din, N., Cheng, X., Ahmad, B., Sheikh, M. F., Adedigba, O. G., Zhao, Y., & Nazneen, S. (2020). Gender diversity in the audit committee and the efficiency of internal control and financial reporting quality. Economic Research-Ekonomska Istraživanja, 1-20.
Wardhani, R., & Joseph, H. (2010). Karakteristik pribadi komite audit dan praktik manajemen laba. Simposium Nasional Akuntansi XIII, 1-26.
Warren, C. S., & Reeve, J. M. (2004). Financial Accounting for Future Business Leaders. South-Western Pub.
Xie, B., Davidson III, W. N., & DaDalt, P. J. (2003). Earnings management and corporate governance: the role of the board and the audit committee. Journal of corporate finance, 9(3), 295-316.
Yusoff, W. F. W. (2010). Characteristics of boards of directors and board effectiveness: a study of Malaysian public listed companies (Doctoral dissertation, Victoria University).
Published
2021-11-17
How to Cite
Olowookere, J. K., Oyewole, O. M., & Lamidi, W. A. (2021). Effects of Audit Committee Diversity on Financial Reporting Quality among Consumer Goods Companies in Nigeria: Array. The Journal of Accounting and Management, 11(3). Retrieved from https://dj.univ-danubius.ro/index.php/JAM/article/view/1321
Issue
Section
Articles
License
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
