AUDIT QUALITY, GOVERNANCE MECHANISMS AND EARNINGS MANAGEMENT OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA
Journal Title: Gusau Journal of Accounting and Finance - Year 2020, Vol 1, Issue 1
Abstract
Corporate failures across the globe have become an issue of concern for stakeholders and regulators. Financial reporting scandals that occurred in oceanic bank, intercontinental bank and the recent bank crises of Skye Bank in 2016 really motivated the need for this study. The study examines audit quality, governance mechanism and earnings management of listed deposit money banks in Nigeria for the period of eleven years from 2009-2019. The population of the study consists of all the 14 listed deposit money banks in Nigeria as at 31st December, 2019. The study adopted expo-factor and correlation research designs, and multiple regression was employed as technique of data analysis. The findings of the study revealed that audit independence, managerial ownership and board independent have significant negative impact on earnings management of quoted Nigerian banks while auditor size and audit tenure have insignificant influence on earnings management of listed deposit money banks in Nigeria. In line with the findings, the study therefore concluded that audit independence, managerial ownership and board independence have significant negative impact on earnings management of banks in Nigeria while audit firm size and audit tenure have no significant impact on earnings management of listed deposit money banks in Nigeria. It is therefore recommended that Nigeria listed deposit money banks should maintain the audit fees they are paying to the audit firm or increase it as any attempt to reduce the audit fees can increase earnings management. However managerial shareholding should be increase as it will reduce earnings management and also board independent directors on the board should be increased from minimum of two as it will reduce earnings management of listed deposit money banks in Nigeria on the other hand there is no significant impact between audit firm tenure and audit firm size on earnings management of listed deposit money banks in Nigeria. For audit firm size the study recommended that local audit firms should be used instead of the Big 4 as the size have no effect on earnings management. Also the study recommended that for audit tenure the bank should maintain its audit tenure as it does not have any influence on earnings management.
Authors and Affiliations
Adamu Magaji, Monday Samuel Okolo, Lawal Ibrahim
Keywords
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