Audit Quality and Earnings Management: A Case of Nigerian Deposit Money Banks

Odume, M. S.; Inyiama, Oliver Ikechukwu; Nwabuisi, Anthony Okorie

doi:10.5281/zenodo.7505335

Audit Quality and Earnings Management: A Case of Nigerian Deposit Money Banks

Authors: Odume, M. S., Inyiama, Oliver Ikechukwu, Nwabuisi, Anthony Okorie

Journal: Global Journal of Finance and Business Review (GJFBR), ISSN 1694-450X

Citation: GJFBR 5(4), 2023-01-05.

DOI: 10.5281/zenodo.7505335

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Type: Original Research

Abstract

This study examines audit quality and earnings management: a case of Nigerian deposit money banks. The main objective of the study is to determine the effect of audit quality on earnings management in Nigeria deposit money banks. The specific objectives of the study are to evaluate the effect of size of audit on earnings management in Nigeria deposit money banks, to assess the effect of audit quality on earnings management in Nigeria deposit money banks and to determine the effect of audit independence on earnings management of deposit money banks in Nigeria from 2009 to 2020. The proxies for independent variable, audit quality, are size of audit, audit fees and audit independence. The study adopted ex post facto research design. The secondary data for the variables were obtained from annual audited reports of seven (7) selected deposit money banks in Nigeria. Ordinary least square regression analysis was used to analyze the data. The result of the analysis showed that size of audit has significant negative effect on earnings management while audit fees and audit independence have insignificant negative effects on earnings management in deposit money banks in Nigeria. It was recommended that deposit money banks should ensure that audit firms are hired on the basis of the previous assignment performance, also ensure independence of audit firms they hire in order to reduce the practice of earnings management. Again users of audited financial statement should subject audited financial statement to the same scrutiny irrespective of whether it was audited by the big or small audit firms.

Keywords

Audit Quality, Earnings Management, Nigerian Deposit Money Banks Authorship Odume, M. S., Inyiama, O. I. & Nwabuisi

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