Comparative Analysis of Audit Quality and Earnings Management of Listed Deposit Money Banks and Insurance Companies in Nigeria.

This study examined the comparative effect of audit quality on earnings management among listed Deposit Money Banks and Insurance Companies in Nigeria. Specifically, the study investigated the influence of Audit Firm Size (AFS), Audit Independence (AI) and Audit Tenure (AT) on Earnings Management (EM). The study adopted an ex-post facto research design and utilized secondary data obtained from the annual financial statements of selected listed banks and insurance firms over the study period. Robust Least Squares regression analysis was employed to analyze the data. The findings reveal that Audit Firm Size, Audit Independence, and Audit Tenure have positive and statistically significant effects on earnings management in both the banking and insurance sectors. This suggests that these audit quality attributes do not effectively constrain earnings manipulation within the Nigerian financial sector. The joint significance tests confirm that audit quality variables collectively influence earnings management in both sectors. The study concludes that although audit quality characteristics are significant determinants of earnings management, their effectiveness in reducing opportunistic financial reporting appears limited in the Nigerian context. It recommends stronger regulatory oversight, stricter enforcement of auditor rotation policies, and improved audit committee effectiveness to enhance financial reporting integrity in the banking and insurance industries