Audit Committee Effectiveness, Earnings Management, and Audit Quality of Listed Firms in Nigeria

This study examines the effect of audit committee characteristics, specifically committee size, independence, and financial expertise, on earnings management, as proxied by discretionary accruals, among listed firms in Nigeria from 2011 to 2025. The study further investigates the moderating role of audit quality in this relationship, using Big Four auditor affiliation as the primary proxy. Drawing on agency theory, stewardship theory, and the resource dependence theory, and employing a panel regression approach with data from 151 listed firms on the Nigerian Exchange Group (NGX), the research estimates discretionary accruals using the modified Jones model. Fixed-effects and random-effects estimations are employed alongside robust post-estimation diagnostics. The results indicate that audit committee independence and financial expertise are significantly and negatively associated with earnings management, whereas committee size exhibits a nuanced and non-linear relationship with accrual-based manipulation. Critically, audit quality significantly moderates these relationships, reinforcing the constraining effect of effective audit committees on managerial opportunism. Among the control variables, firm size and profitability exert significant negative effects on earnings management, while growth opportunities are positively associated with discretionary accruals. The findings carry important implications for regulators, corporate boards, and investors in Nigeria and comparable emerging economies. This study contributes to the growing body of literature on corporate governance and financial reporting quality in Sub-Saharan Africa, offering granular insights for policy design and board-level reform