Audit Fees and the Financial Reporting Quality of Listed Non-Financial Services Firms in Nigeria Moderating Role of Audit Committee’s Independence
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Abstract
This study examines the moderating role of audit committee’s independence on the effect of audit fees and the financial reporting quality of listed non-financial services firms in Nigeria. Audit Committee’s Independence was measured by the ratio of independent director in the audit committee to total audit committee members. Audit fees was measured by logarithms of audit fee while financial reporting quality was measured by discretionary accruals. The study employed 30 non-financial services firms listed on the Nigerian Exchange Group over a period of 11 years from 2011 to 2021. The data was handpicked from the annual financial reports of the sampled companies. Descriptive statistics and multiple regression analysis techniques were used for data analysis. Findings revealed that audit fees does not have a direct effect on financial reporting quality of listed non-financial services firms in Nigeria. However, the effect of audit fees on financial reporting quality is statistically significant when moderated by audit committee’s independence. Based on the findings, the study recommended that more independent directors should be included in the audit committee of listed non-financial services firms in Nigeria. Regulators, shareholders, boards of directors, chief executive officers would benefit from the findings of this study, especially in policy and decision-making purposes.
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