Enhancing Financial Reporting Quality of Companies in Nigeria: Ripple Effect of Internal Audit Committee Structure

Abstract

The study examined the effect of internal audit committee diversity on the financial reporting quality of listed industrial goods companies in Nigeria. An ex post facto research design was adopted, and data were collected from nine purposively selected firms listed on the Nigerian Exchange Group (NGX) over the period 2019 to 2023. Audit committee diversity was measured using gender diversity, while financial reporting quality was proxied by discretionary accruals. Secondary data were extracted from the audited annual reports of the selected firms. Panel least squares regression was used to analyze the data, supported by diagnostic tests such as the histogram normality test and residual analysis to ensure the validity of the model assumptions. The regression results revealed a statistically significant relationship between audit committee diversity and financial reporting quality. Specifically, audit committee diversity had a positive coefficient of 15,212,594 with a p-value of 0.0031, indicating a significant effect at the 1% level. Based on these findings, the study concluded that audit committee diversity significantly influenced the quality of financial reporting among industrial goods firms in Nigeria. It was recommended that companies and regulators enhance the structure and effectiveness of audit committees by promoting balanced diversity, ongoing training, and performance monitoring to improve financial oversight and reporting integrity.