AUDIT QUALITY AND EARNING MANAGEMENT: EVIDENCE FROM DEPOSIT MONEY BANKS IN NIGERIA

Despite regulatory efforts to reduce unethical financial reporting methods, financial misbehavior continues to occur in Nigeria's deposit money institutions. The purpose of this study is to examine the relationship between audit quality and earnings management in the country's quoted deposit money institutions. The study covers all ten quoted deposit money banks in Nigeria, with a sample size of nine banks. The hypotheses were tested using robust random effect regression models. The findings show that joint audit and audit fees have a strong favorable effect on the absolute discretionary accrual of quoted deposit money institutions in Nigeria. However, audit firm size and audit tenure exhibit insignificant positive effects on the discretionary accrual of deposit money banks in Nigeria. The study advocates for the increased engagement of non-big-four audit firms by deposit money banks in Nigeria for auditing their financial statements. This strategic shift is proposed to discourage manipulations of financial statements and reduce absolute discretionary accrual within these institutions. Furthermore, the study recommends that deposit money banks in Nigeria should discourage the simultaneous appointment of multiple auditing firms for audit assignments during the same accounting period, aiming to curtail absolute discretionary accrual within their operations.

1 29 Mar, 2024

pg: 19

JBMIC PORTAL SYSTEM

Contri. 2+