Audit Fees and Financial Reporting Quality: A Study of Listed Companies in Nigeria

Bala, Hussaini; Amran, Noor Afza; Shaari, Hasnah

doi:10.30543/7-2(2018)-17

Cited by 8 publications

(9 citation statements)

References 16 publications

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“…Moreover, higher audit fees can indicate the restatement of financial reports and can also be used to assess the quality of financial reporting of a firm. Therefore, the audit fees ratio index has also been used as a determinant of financial reporting disclosure quality, consistent with Tang (2008), Bala et al (2018) and Shakhatreh et al (2020). Lantto and Shalstrὂm (2009) used key financial indicators as proxy indicators to measure a firm's financial reporting disclosure quality.…”

Section: Ifrs Compliance As a Measure Of Financial Reporting Disclosure Qualitymentioning

confidence: 93%

Constructing a Financial Reporting Disclosure Quality Model of Listed Firms in Malaysia

Hla

Cheuk

Isa

et al. 2021

IJBS

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The national accounting standards set by the Malaysian Accounting Standards Board (MASB) is largely converged with the International Financial Reporting Standards (IFRS). The benefit arising from this is to enable foreign investors to analyse their investments via a standardised financial reporting system in Malaysia. Financial reporting disclosure quality by the listed firms in the consumer product and service sector on Bursa Malaysia is an essential feature in the firms’ financial reporting to the public. This research evaluates the development of financial reporting disclosure quality assurance by firms listed on Bursa Malaysia, by examining financial reporting disclosure quality and subsequent compliance with the International Financial Reporting Standards. This study uses a content analysis approach to identify a financial reporting standard compliance disclosure index, based the financial statements issued by firms listed on Bursa Malaysia from 2008 – 2016. A panel regression model is utilised to construct a model of financial reporting disclosure quality of the firm, based the extent of compliance with IFRS disclosure requirements from the following perspectives: corporate governance practice, audit quality and corporate social responsibility. The sustainability of financial reporting disclosure quality by the listed firms and subsequently the Malaysian capital markets will enable the same to attain a competitive edge in the international markets. In addition, this study will discuss financial reporting disclosure quality implications relevant to the policy makers in Bursa Malaysia, and it is envisaged that such model can be utilised in the improvement of future financial reporting policies.

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Section: Ifrs Compliance As a Measure Of Financial Reporting Disclosure Qualitymentioning

confidence: 93%

Constructing a Financial Reporting Disclosure Quality Model of Listed Firms in Malaysia

Hla

Cheuk

Isa

et al. 2021

IJBS

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“…SHPREACT it = β 0 +β 1 AUDCIND it + β 2 AUDEXP it + β 3 AUDITSIZ it + β 4 AUDMET it + β 5 AUDCDIV it + e it (2) where: The main technique used for data analysis is the panel regression model. The Hausman Specification test result is used to select between the fixed and random effect models.…”

Section: Independentmentioning

confidence: 99%

“…The audit committee is one of such mechanisms used to ensure the firm is properly managed" [1]. "In Nigeria, there has been massive fraud and unethical practices within and among a number of firms" [2]. "The Companies and Allied Matters Act (CAMA) 2004 [3] as amended in 2020 which was enacted to ensure that the relationship among the board, shareholders and the management including other stakeholders is balanced for healthy competition, has not lived up to expectation as a result of unethical business practices by managers which has affected the financial performance and share price reaction of many firms in Nigeria.…”

Section: Introductionmentioning

confidence: 99%

Audit Committee Attributes and Share Price Reaction of Listed Deposit Money Banks in Nigeria

Gbenyi¹,

Tsegba²,

Duenya

2023

AJEBA

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This study investigated the effect of audit committee characteristics on share price reaction of listed Deposit Money Banks (DMBs) in Nigeria. Specifically, the study sought to examine the effect of audit committee independence, expertise, size, frequency of meetings and gender diversity on share price reaction of listed DMBs in Nigeria. The study adopted the ex-post facto research design. The study used a sample of 12 DMBs from a population of 14 DMBs listed on the Nigerian Exchange Group using the filtering method. Data were sourced from annual reports and accounts of the sampled DMBs in Nigeria. The study period covered ten (10) years from 2011-2020. Pooled Auto Regressive Distributive Lag (ARDL) Model was used for data analysis. The results of the study suggested that audit committee independence, size, frequency of meetings and gender diversity have a perverse and significant effect on share price reaction of DMBs listed in Nigeria. The result of the study also established that audit committee financial expertise positively but insignificantly affects share price reaction of DMBs listed in Nigeria. The study, therefore, recommended that financial expertise of the audit committee members should be given utmost attention by the board since it exerts a positive effect on share price reaction. This is supported by the requirements of CAMA 2020 which states in section 404 subsection (5) that all audit committee members should be financially literate and at least one of them should be a member of a professional accounting body established by an Act of the Nigerian Parliament. The study also recommended that DMBs should strive to maintain a small audit committee size below the stipulated maximum number of 5 as stipulated by CAMA 2020 for effective performance.

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“…For instance, Martinez and Moraes (2017) using a sample of 300 firms listed on the BM&FBovespa, Brazil for the period 2009 to 2012 showed a negative relationship between the cash flow and earnings management. Using a sample of 88 firms in Nigeria, Bala et al (2018) revealed that higher audit fees are associated with a lower level of discretionary accruals; and, Choi et al (2010) found an asymmetric relationship between unexpected (abnormal) audit fees and abnormal accruals. The results showed that abnormal audit fees are negatively associated with abnormal accruals for observations with positive values; whereas, no significant relationship exists for observations with negative values.…”

Section: Residual Audit Fee and Real Income Smoothingmentioning

confidence: 99%

Residual audit fee and real income smoothing: evidence from quoted non-financial firms in Nigeria

Egbunike

Igbinovia

Okafor

et al. 2022

AJAR

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PurposeThe study investigated the relationship between residual audit fee and real income smoothening, proxied as real operating cash flow and production expenditure smoothing of non-financial firms in Nigeria.Design/methodology/approachThe study relied on secondary data from annual financial statements of 75 firms in the non-financial sector from 2010 to 2019. The study estimated the residual audit fee using a modified model from several contexts to suit the Nigerian environment. The hypotheses were tested using the dynamic panel GMM estimation procedure.FindingsThe results showed a significant negative effect of residual audit fee on (real) operating cash flow smoothing and production expenditure smoothing of non-financial firms. The control variables showed mixed effects for the industry-related (firm size and profitability), auditor attribute (audit quality and audit report lag) and the board related (board size and board independence).Research limitations/implicationsThe firms included in the analysis were selected based on data availability from MachameRatios® and the occurrence of missing values for some of the variables used in the various estimation models may bias results.Practical implicationsThe study identifies the nexus between RAF and real earnings management practices of non-financial firms; and shows the implication of fee payment to the overall conduct of the audit. More so, the mixed findings from the CVs suggest that in the context of developing economies, shareholders and capital markets regulators should be watchful of residual audit fees and utilise it as a gauge for audit quality and also an indicator of opportunism and weak internal control in the firm in the future assessments.Social implicationsThe implication of the study stems from its relevance to the capital market stability and the potential negative disastrous effect of corporate failure from earnings management practices.Originality/valueThe study develops a newly residual audit fee model to explore the effect of RAF on real income smoothing rather than the widely used models from prior literature; secondly, the focus on real activities manipulation may present additional evidence that applies to developing countries rather the widely used accrual measurement technique from an economic bonding perspective.

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Audit Fees and Financial Reporting Quality: A Study of Listed Companies in Nigeria

Cited by 8 publications

References 16 publications

Constructing a Financial Reporting Disclosure Quality Model of Listed Firms in Malaysia

Constructing a Financial Reporting Disclosure Quality Model of Listed Firms in Malaysia

Audit Committee Attributes and Share Price Reaction of Listed Deposit Money Banks in Nigeria

Residual audit fee and real income smoothing: evidence from quoted non-financial firms in Nigeria

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