AUDIT QUALITY AND EARNINGS MANAGEMENT OF LISTED NON- FINANCIAL FIRMS IN NIGERIA THE MODERATING EFFECT OF AUDIT COMMITTEE INDEPENDENCE Section Articles

Abstract

This paper examines the moderating effect of audit committee independence on the relationship between audit quality and earnings management among listed non- financial firms in Nigeria. Audit quality is represented by audit firm size, audit fees, auditor industry specialization and auditor tenure, while earnings management is measured through real activities manipulation based on the Roychowdhury (2006) model. The study adopts a correlational research design and uses panel data for 50 listed non-financial firms over 2015–2024, yielding 500 firm-year observations. The study results indicate that audit firm size and auditor industry specialization have significant positive direct relationships with earnings management, while audit fees and auditor tenure are insignificant. Audit committee independence significantly and negatively moderates the relationships involving audit firm size, auditor tenure and auditor industry specialization, while its interaction with audit fees is insignificant. The study recommends that regulators and audit committees strengthen the independence of audit committee members to enhance the monitoring of audit quality and constrain earnings management practices among listed non-financial firms in Nigeria.