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IJSTR >> Volume 9 - Issue 4, April 2020 Edition

International Journal of Scientific & Technology Research  
International Journal of Scientific & Technology Research

Website: http://www.ijstr.org

ISSN 2277-8616

The Mediating Effect Of Internal Audit Committee On The Relationship Between Firms Financial Audits And Real Earnings Management

[Full Text]



Garba Ibrahim, Noorhayati Mansor, Ali Umar Ahmad





The prevalence of accounting scandals and inconsistent findings from hitherto studies on real earnings management have incited the need to improve the relevance of financial reporting by setting up different and sound governance mechanisms coupled with the introduction of mediating variables to improve the earnings quality. This paper examines the mediating effect of the internal audit committee on the relationship between a firm financial audit and real earnings management in listed non-financial firms in Nigeria. The data were obtained from Thomson Reuters DataStream and financial reports of firms from 2011-2017. The fixed effects, random effects (GLS) and the generalized method of moments (GMM) were used for panel data regression analysis using the firm financial audit and real earnings management. The findings showed that the internal audit committee mediates the relationship between a firm financial audit and real earnings management. Further analysis revealed that audit fees and brand name auditors have positively impacted on the earnings quality while audit tenure was found to be less effective in deterring real earnings manipulation. The findings also indicated that firm size and leverage were found to be less impacted by the earnings quality. There is a need for much emphasis on the use of competent audit committee independence among listed non-financial firms in Nigeria. This could help in ensuring an effective monitoring strategy and restraining real earning manipulation.



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