Abstract This paper investigates the effect of audit committee characteristics on financial reporting quality (FRQ) among listed service firms in Nigeria, with a particular focus on the moderating role of external audit quality (EAQ). Difference Generalized Method of Moments (GMM) estimation was used to overcome the endogeneity and autocorrelation problems, and the analysis was based on a panel dataset of 20 listed service firms that satisfied the conditions of a period time spanning from 2014 to 2023. The results indicate that the quality of the external audit plays an important moderating role in the linkage between audit committee textures and financial reporting quality. Specifically, EAQ enhances the positive effect of audit committee independence and meeting frequency on FRQ, while it mitigates the negative effect of audit committee expertise. Furthermore, leverage (LEV) exerts a significant positive influence on FRQ, while firm size (FSIZE) is not statistically significant. The statistical validity of the instruments and lack of second order autocorrelation are supported by the Arellano-Bond and Sargan diagnostic tests that provide evidence of the robustness of the model. The study recommends encouraging a balanced collaboration between internal audit committees and external auditors to prevent role dilution and optimize oversight efficiency.
Ebre et al. (2026) studied this question.