AUDIT COMMITTEE CHARACTERISTICS AND FINANCIAL REPORTING QUALITY OF LISTED NON-FINANCIAL FIRMS IN NIGERIA

ABSTRACT The quality of financial reporting of firms in Nigeria has raised concerns among stakeholders, prompting research into corporate governance mechanisms such as audit committee characteristics. In Nigeria, weak corporate governance practices have often been linked to reporting failures, making the role of audit committees critical. This study therefore investigates the effect of audit committee characteristics on financial reporting quality among listed non- financial firms in Nigeria. Specifically, the study examines audit committee size, independence, financial expertise, and meeting frequency. Employed correlational ex-post facto research design and secondary data were also obtained from the published annual reports of 20 non-financial firms listed on the Nigerian Exchange Group (NGX) covering the period of 2015–2023. Descriptive statistics, correlation analysis, and multiple regression techniques were employed to analyze the data. The findings indicates that audit committee independence has a negative and significant effect on financial reporting quality under both the Fixed Effects (–0.228, p < 0.05) and LSDV (–0.208, p < 0.05) models. Audit committee financial expertise has a positive significant effect on financial reporting quality across all models (OLS = 0.172, RE = 0.164, LSDV = 0.121; all p < 0.05). Audit committee size revealed a negative and significant relationship with financial reporting quality across most models (OLS = –0.227, FE = –0.192, RE = –0.203; all p < 0.05). Audit committee meeting frequency has a statistically significant negative effect on financial reporting quality across all models (OLS = –0.265, FE = –0.241, RE = –0.258, LSDV = –0.199; all p < 0.05). Audit committee gender diversity has a negative but statistically insignificant effect on financial reporting quality across all models. The study concludes that the effectiveness of audit committees in enhancing financial reporting quality in Nigeria is largely dependent on the depth of their expertise and the authenticity of their independence and engagement. It is recommended that Companies should prioritize the separation of CEO and chairperson roles to enhance board independence and reduce risks associated with power concentration, firms should enforce a clear separation between the CEO and board chairperson positions to improve oversight and reduce potential conflicts of interest, boards should ensure risk management committees are independent and empowered to monitor and control earnings management effectively, regulatory bodies should promote awareness and compliance with corporate governance codes, focusing on leadership structures and risk oversight, efforts should be made to encourage more diversified ownership to complement governance