Audit Committee Size and Financial Reporting Quality of Listed Non-Financial Firms in Nigeria
Abstract
Main purpose: This study examined the effect of audit committee size on the financial reporting quality of non-financial firms listed on the Nigerian Exchange Group (NGX). Methodology: Secondary data were obtained from the annual reports of 58 sampled non-financial firms, drawn from a population of 106 listed firms, covering the period from 2013 to 2024. The data were analysed using panel regression estimation techniques to determine the effect of audit committee size and relevant firm-specific variables on financial reporting quality. Findings: The results revealed that audit committee size had a positive and statistically significant effect on financial reporting quality (t = 2.2511, p < 0.05), indicating that larger audit committees may provide broader oversight of the financial reporting process. Leverage also had a positive and statistically significant effect on financial reporting quality (t = 2.0864, p < 0.05). In contrast, audit firm size had a negative and statistically significant association with financial reporting quality (t = −3.1325, p < 0.05), suggesting that the use of larger audit firms does not necessarily translate into higher financial reporting quality among the sampled firms. Practical implications: Boards of listed non-financial firms should maintain appropriately constituted audit committees with sufficient membership and members possessing relevant financial and accounting expertise to strengthen oversight of the financial reporting process. Corporate boards and regulators should also pay closer attention to audit committee composition, leverage practices and the effectiveness of external audit arrangements rather than relying solely on audit firm size as an indicator of reporting quality. Originality/novelty: This study extends the Nigerian corporate governance literature by applying Shivakumar’s (2003) accounting-quality model to examine the effect of audit committee size on financial reporting quality among listed non-financial firms, thereby providing context-specific evidence from a segment characterised by distinct regulatory and governance frameworks. Keywords: Audit Committee Size, Non-Financial Firms, Financial Reporting Quality, Nigerian Exchange Group