Audit Committee Size and Financial Reporting Quality of listed Non-financial Firms in Sub-Saharan Africa: The Moderating Role of Board Independence

This study investigates the impact of audit committee size on the financial reporting quality of non-financial firms listed in Sub-Saharan Africa, with a specific focus on the moderating role of board monitoring. Recent corporate scandals have raised concerns about the effectiveness of audit committees and the quality of financial reports, particularly in developing regions like Sub-Saharan Africa. The study aims to address gaps in the literature by providing a comprehensive analysis across multiple countries in the region. The study employs ex post facto research design using a panel data set from 2013 to 2022, encompassing 235 nonfinancial firms listed on the Nigerian Exchange Group, Johannesburg Stock Exchange, and Nairobi Stock Exchange. Data were collected from annual reports, focusing on variables such as audit committee size, board independence, and financial reporting quality, measured using the Jones Discretionary Accrual Model. The analysis was conducted using GMM techniques to determine the relationships and interactions between the variables. The findings indicate that audit committee size has a positive but statistically insignificant effect on financial reporting quality. Similarly, board independence, both as an independent variable and as a moderator, showed a negative but statistically insignificant relationship with financial reporting quality. These results suggest that increasing the size of audit committees and enhancing board independence alone may not significantly improve financial reporting quality in the studied context. The study highlights the importance of considering the effectiveness and interaction of governance mechanisms rather than focusing solely on their individual attributes. This study contributes to the literature by providing empirical evidence from a region that has been underrepresented in previous research. It emphasizes the need for nuanced governance reforms that consider the interplay between various governance mechanisms. The findings underscore the importance of fostering a culture of active oversight and independence within corporate boards to enhance the effectiveness of audit committees and improve financial reporting quality.