AUDIT COMMITTEE CONTROL MECHANISMS AND FINANCIAL REPORTING QUALITY: EVIDENCE FROM LISTED INDUSTRIAL GOODS COMPANIES IN NIGERIA

Abstract

There is a persistent concern about the credibility of financial reporting quality of industrial goods companies given the nature of their operations. This study examines whether audit committee control mechanisms affect the financial reporting quality (FRQ) of industrial goods companies quoted on the Nigerian Exchange Group. The study employs the ex post facto design, using panel data from 14 industrial goods firms over from 2015 to 2024. The analysis employs panel regression with corrected standard errors to address heteroscedasticity and firm-specific effects. The findings reveal that ACG (β = 0.024, p = 0.004) and tenure (β = 0.0080, p = 0.0000) have significant positive influence on FRQ, indicating that diverse and experienced audit committees enhance control effectiveness and constrain opportunistic reporting behavior. In contrast, ACS (-β = -0.0127, p = 0.740) and meeting frequency (β = -0.0006, p = 0.605) exert insignificant effect. The study concludes that audit committee gender diversity and tenure significantly impact the financial reporting quality of the industrial goods companies in Nigeria, while the activity as represented by meetings and expertise do not impact the financial reporting process. The study recommends, among other things, that regulatory authorities should strengthen corporate governance codes by encouraging greater gender diversity on Audit committee of listed industrial goods companies, as female representation has been shown to significantly improve FRQ