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| The Influence of Audit Quality on Earnings Management among Listed Oil and Gas Companies in Nigeria |
Bashir Babatunde Alao (ACA, CFE, CAMS), Oladejo Lukman Gbolagade (PhD)
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Abstract:
The primary aim of this study is to evaluate the impact of audit quality on earnings management practices among oil and gas companies listed in the Nigeria Stock Exchange (NSE) for period of 5 years (2014-2018). The focus of the research is on oil and gas companies due to recent allegations of large scale financial misrepresentations associated with the Nigerian oil sector. Similarly, over the past decades, the global markets have witnessed several accounting scandals mainly because of the manipulation of the accounting figures reported in the financial statements. To achieve the objectives of this study, the corporate annual reports of twelve (12) listed oil and gas companies for the period under consideration were used for the study. In testing the research hypotheses, the study adopted the use of both descriptive statistics and Ordinary Least Square (OLS) regression analysis is used to explore the relationship between Audit quality proxies which are Audit firm size, auditor industry specialization and auditor independence and Earnings management in listed companies. The management of earnings is measured using Discretionary Accruals (a modified Jones model) while Eviews 8.1as the tool of data analysis of OLS regression. The results suggest that there is a relationship between audit quality and earnings manipulation; auditors’ independence has a significant positive relationship with earnings management, while the rest of the hypotheses indicate that the other variables remain to have an insignificant relationship with earnings management.
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