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Audit Committee Characteristics

8172 Words33 Pages

INSTITUTIONAL SHAREHOLDING A MODERATOR TO AUDIT COMMITTEE CHARACTERISTICS AND EARNINGS MANAGEMENT OF LISTED CONGLOMERATE FIRMS IN NIGERIA
Abstract

The relevance of audit committee characteristics in constraining managerial opportunistic tendencies has been explored by various researchers; the confrontational view in terms of the direction of their relationship has paint a vague picture which begs the introduction of other monitoring mechanism that may give a clear cut picture on direction of this relationship. This study uses two-stage least squares model and examines the impact of audit committee characteristics, institutional shareholding on discretionary accruals of listed conglomerate firms in Nigeria. Secondary data were extracted from …show more content…

To ascertain the extent to which audit committee financial expertise affects earnings management of listed conglomerate firms in Nigeria..

iv. To examine the influence of audit committee meetings on earnings management of listed conglomerate firms in Nigeria.
v. To investigate the effect of institutional shareholding on earnings management of listed conglomerate firms in Nigeria.
In line with the objective of this study the following null hypotheses were formulated.

H01 Audit committee size has no significant effect on earnings management of listed conglomerate firms in Nigeria.

H02 Audit committee independence has no significant impact on earnings management of listed conglomerate firms in Nigeria.

H03 Audit committee financial expertise has no significant effect on earnings management of listed conglomerate firms in Nigeria.

H04 Audit committee meetings have no significant influence on earnings management of listed conglomerate firms in Nigeria.

H05 institutional shareholdings have no significant influence on earnings management of listed conglomerate firms in …show more content…

The theory involves a contract under which the owners/shareholders called principal engages the services of a controller/managers called agent(s) to perform some services on their behalf , where some powers of decision making are delegated to the agent (Jensen & Meckling 1976). Hence it is expected of the agent(s) (managers) to carry out this fiduciary contract with utmost sense of transparency and accountability. This means that they are expected to ignore their selfish interest and act in such a manner that benefits the shareholders. Though, in practice, the existence of information asymetry that gives the managers information privilege which may lead to the violation of their principal agency arrangement as managers are tempted to use their positions for self benefits, thus the agency problem (Hassan et al, 2012). Audit committee is one of the important mechanisms put in place to align the interests of the agents and principals since their composition constitutes equal number of shareholders and

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