Audit committee and financial reporting quality in the Nigerian deposit money banks

Abstract

This study investigated how audit committees influence the quality of financial reporting in Nigerian deposit money banks. It focused on four key factors namely the independence of the audit committee, how often it meets, the expertise of its members, and its size. The research covers thirteen publicly listed financial institutions over a fourteen-year span, from 2010 to 2023.The study analyzed the relationship between these audit committee characteristics and financial reporting quality using the Generalized Linear Models (GLM) method. Findings show that audit committee independence has a negative and statistically insignificant effect on reporting quality, suggesting that simply having independent members is insufficient for enhancing financial transparency. Similarly, the frequency of meetings revealed negatively and insignificant effect on financial reporting quality, implying that frequent meetings alone do not guarantee better financial oversight. Notably, the expertise of committee members has a negative and significant effect, indicating that financial experts on the committee may lack effectiveness in enforcing discipline or might be susceptible to management influence. Committee size shows a statistically insignificant positive effect, which means increasing the number of members does not necessarily improve oversight. Based on these results, the study recommends strengthening regulatory frameworks to ensure true independence of committee members, prioritizing the effectiveness of meetings over their frequency, applying more rigorous standards in selecting financially knowledgeable members to prevent management influence, and focusing on the committee's performance rather than its size.