FIRMS LEVERAGE AND EARNINGS MANAGEMENT OF LISTED CONSUMER GOODS FIRMS IN NIGERIA: THE MODERATING EFFECTS OF AUDIT COMMITTEE FINANCIAL EXPERTISE
DOI:
https://doi.org/10.67199/mey4ez83Keywords:
Earnings Management, Firm Leverage, Audit Committee Financial Expertise, Audit Quality, Corporate Governance, NigeriaAbstract
This paper investigates the impact of leverage on earnings management, using audit committee financial expertise as a moderating variable among selected Nigerian listed corporations. The study is based on the panel data of 15 consumer goods firms covering the years 2018-2024 and Fixed Effects Model was used. The proxy for earnings management was discretionary accruals, while leverage was defined as the total debt over total assets ratio. The findings indicate that leverage shows a positive but statistically insignificant contribution to the game of earnings management, thus making it clear that financial risk by itself is not a major determinant of the reporting behavior of the management. Nevertheless, the Audit committee financial expertise plays a crucial role in the relationship between leverage and earnings management, implies that the presence of the highly skilled professionals in the committee could create the opportunity for the earnings to be manipulated sophisticatedly rather than being restricted. The size of the firm negatively impacts the management of earnings, while profitability and audit quality have a positive effect. The study recommends that the independence of the audit committee and the regulatory oversight should be strengthened so as to achieve transparency in financial reporting.
Keywords: Earnings Management, Firm Leverage, Audit Committee Financial Expertise, Audit Quality, Corporate Governance, Nigeria.
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