Effectiveness of Audit Committee towards Enhancing Financial Reporting Quality of Listed Nigerian Firms in Covid-19 Era


Effectiveness of Audit Committee towards Enhancing Financial Reporting Quality of Listed Nigerian Firms in Covid-19 Era

Dr. Anthony Idoko Onoja Department of Accounting, Department of

Accounting, Benue State University, Makurdi         tonybrightdestiny@gmail.com

Dr. Jacob O. Ame FCA, Department of Accounting, Nasarawa State University.

Godwin O. Agada, ACA and Dr. Theresa Ekpe Oto, Department of Accounting, Benue State University, Makurdi


This study examines the effectiveness of audit committee towards enhancing financial reporting quality (FRQ) of listed

Nigerian non-financial firms. The study becomes imperative in the aftermath of covid-19 pandemic as firms face significant uncertainty, a rapidly changing risk landscape and an increased need for high quality financial information. Audit committee attributes namely, size, frequency of meeting, independence, and financial expertise were interacted as proxy for audit committee effectiveness while FRQ was measured using the BSU- Financial Reporting Quality Index (Onoja, 2021). Secondary data were collected from audited financial reports of the sampled firms. 86 firms out of the population of 107 listed non-financial firms in Nigeria were sampled out. The study period covers 430 firm-year observations from 2014 to 2018. Descriptive statistics and fixed effect regression analysis were employed for analysis. The result finds on the basis of individual attributes that audit committee size, frequency of meeting and financial expertise has significant positive effect on FRQ while independence against apriori expectation has significant negative effect on FRQ. Consistent with Positive Accounting Theory and Agency Theory, audit committee effectiveness has a significant positive effect on FRQ. The study concluded that an effective audit committee enhances the financial reporting quality of listed non-financial firms in Nigeria prior to covid-19 pandemic. However, the covid-19 compliance behavior has caused a strategic shift in the roles of audit committee as a key component of good corporate governance. Therefore, with more on their agenda than ever before, the study recommends that audit committees should utilize the tenets of Diligent Effort Theory to balance their core responsibilities with emerging priorities. Governance regulators like Financial Reporting Council of Nigeria and Securities and Exchange Commission should encourage firms to maintain the maximum required size, have fully independent directors, and at least two financial experts of comparable status with executives. These members should be technologically savvy to exploit virtual and physical meetings at least six times per year for effective monitoring and oversight of firms’ financial reporting process.

Keywords: audit committee effectiveness, financial reporting quality, covid-19 pandemic, good corporate governance, Nigerian non-financial firms

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