The quality of financial reporting has long been a source of concern for professional accountants, regulators, and other users of financial data. This is due to the fact that financial reporting has been a primary technique of communicating the outcomes of transactions and events that occurred within the business to outsiders. It enables them to use such information to examine firm's economic performance and condition, as well as to drive economic decisions. As a result, every user of financial information anticipates it to assist him in assessing the health of the reporting business and making appropriate financial decisions. However, previous reporting scandals, particularly the Enron, Worldcom, Parmalat, and several Nigerian firms such as Cadbury Nigeria Plc in 2006, Afribank Nigeria Plc in 2009, and Intercontinental Bank Plc in 2009, have cast serious doubt on the quality of annual reports circulating in a corporate environment, as well as their ability to meet the expectations and needs of users [1].

Another global demand is for ideal ways for assessing the quality of financial reporting. According to Albersmann and Hohenfels [2], the greater the quality of financial reporting, the greater the benefits to investors and users of financial reports. Furthermore, FRQ is a broad notion that incorporates non-financial information that is important for decision making in addition to financial information [3].

Similarly, corporate governance is critical to ensure Financial Reporting Quality (FRQ). The researchers examined the association between corporate governance mechanisms and FRQ in depth. Several research have revealed variety of findings on governance methods and how they positively and dramatically influence the financial information quality of companies [4]. Numerous studies noted that, organizations with excellent corporate governance provide high-quality financial reports [5]. Efficient corporate governance in the financial reporting process is a critical instrument for companies and their auditors to satisfy all of these tasks [6].

In keeping with the goal of ensuring the quality of financial reporting, the Nigerian Securities and Exchange Commission (SEC) issued out a revised Nigerian Code of Corporate Governance (CCG) in 2018. The Code aims to institutionalize best practices in corporate governance in Nigerian firms. The Code is also intended to raise public knowledge of important corporate reporting and ethical practices that will improve the firm's integrity. The Code attempts to rebuild public trust and confidence in the Nigerian economy by institutionalizing good corporate governance norms, hence encouraging more trade and investment. Companies with active boards and competent management that behave with integrity and engage with shareholders and other stakeholders can achieve their commercial objectives while also positively contributing to society.

Furthermore, as one of the most important components of a firm's structure, AC has the ability to improve financial reporting quality by examining financial statements on behalf of the BoDs [7]. It has the potential to connect auditors and business executives through essential monitoring tasks [8]. The Companies and Allied Matters Act (CAMA), 2004 and the Revised CCG 2018, respectively, require all listed firms to form an AC under Section 359 (3 and 4) and Part E Article 30 (1-4a-i) of the CAMA and the Securities and Exchange Commission (SEC). The Audit Committee (AC) must have three independent directors and three shareholder representatives, as well as at least one member with financial or accounting competence [9]. The CAMA and SEC requirements also require the AC to monitor and advise management on the preparation and timely dissemination of financial information to shareholders and other stakeholders [10].

Furthermore, the AC is responsible for reviewing critical issues and decisions made regarding the firm's financial statements [11]. The committee is equally responsible for safeguarding investors' interests by ensuring high FRQ transparency, reviewing accounting policies, ensuring the independence of external auditors, and regulating compliance [12].

Section 359(6) specifically requires AC to perform the following functions: 

• Determining whether the company's accounting and reporting standards adhere to legal requirements and agreed-upon ethical norms

• Assessing the audit requirements' scope and planning

• Examining the findings on management issues in collaboration with the external auditor, as well as departmental answers

• Monitoring the efficacy of the company's accounting and internal control systems

• Recommending to the board the appointment, dismissal, and remuneration of the firm's external auditors

• authorizing the internal auditor to conduct investigations into any company activity that may be of interest or concern to the committee [13]

Nigeria's AC composition is distinctive and distinct, reflecting considerable efforts by regulators to rebuild investors' confidence that has been undermined as a result of prior scandals and fraud. This has resulted in yearly losses ranging in the billions of dollars in both the financial and non-financial sectors [14]. Nigeria's AC differs in size and composition from that of both established and emerging nations. According to proponents of the agency theory, regulators have placed a greater emphasis on huge AC. Therefore, shareholders participation in the AC is a recent phenomenon that has sparked controversy about the effectiveness of the AC. By improving communication between auditors and management, shareholders are expected to discourage opportunistic management practices, increase financial reporting timeliness, and maintain auditor independence [15]. 

Furthermore, financial competence among AC members may help to reduce agency costs [16]. This is because financial skill is likely to prevent financial statement errors and detect instances of financial fraud [17]. The AC chairman is in charge of managing the financial reporting process [18] and, as such, is also in charge of the reporting process breakdown [19]. Furthermore, institutional shareholders have more business knowledge, superior monitoring abilities, and the financial clout to mitigate agency issues when compared to regular shareholders [20]. According to the current study, an appropriate composition of AC, with highly committed shareholders and blockholders, would be inclined as owners and stakeholder representatives to influence credible and reliable financial reports, thereby providing an enabling environment for external auditors to operate [21].

In Nigeria, AC has not demonstrated adequate competence to carry out required supervisory tasks, as proven by the failure of some enterprises [22]. This circumstance prompted criticism of the audit committee for failing to carry out tasks delegated to it by CAMA 2004, the Securities and Exchange Commission, and regulators. Several factors are considered to have contributed to this abnormality. The competence of the AC's members has been called into doubt, as it is claimed that the majority of members do not comprehend financial reporting and are unable to make credible contributions. The remainder of the paper includes a review of the literature, methodology, results interpretations, a conclusion, and recommendations.

Literature Review

The Concept of Financial Reporting: The term FRQ has been defined in a variety of ways. For example, it is defined as the precise approach in which the report displays information about a business activity as it pertains to its financial status, with the goal of informing shareholders about a company's operations [19]. According to Karajeh and Ibrahim [23], FRQ is the degree to which financial statements convey fair and authentic information about an enterprise's financial status and performance. However, Ragab [7] provides a frequently recognized definition, claiming that financial reporting quality is complete and unambiguous information tailored to guide users. According to the International Accounting Standard Board (IASB), the goal of financial reporting is to offer financial information about the reporting entity that is relevant to present to potential equity investors, lenders, and other creditors in making decisions as capital providers. Compliance with the IASB objectives and qualitative features of financial reporting information will undoubtedly improve financial reporting quality.

Qualitative Features of Financial Reporting

The Financial Accounting Standard Board (FASB) and the International Accounting Standards Board (IASB) emphasized in their conceptual framework for financial reporting that there are agreed-upon characteristics of high-quality financial reporting. Relevance, reliability, clarity, faithful representation, comparability, verifiability, and timeliness are some of the qualitative properties of FRQ. They are classified as essential qualitative traits and augmenting qualitative characteristics. A theoretical explanation for each of these phrases underlines their significance as qualitative features while also indicating which attributes are regarded as fundamental by certain frameworks.

Measuring Financial Reporting Quality

Various measuring approaches have been used in previous studies to assess the quality of financial reporting. Some examples are: 

• accrual models

• value relevance model

• specific aspects in yearly reports

• qualitative characteristics model [24]

However, the accrual models, which are addressed in this study, are the most generally used models among scholars.

Accrual Model

The level of earnings management is used as a proxy for the quality of financial reporting in this model. It assesses the extent to which earnings are managed in accordance with existing regulations and legislation. The approach posits that managers manage earnings through discretionary accruals, or accruals over which the management has some control [25]. This model is predicated on the notion that a company's earnings are regarded as the most important item in its financial statements. As a result, most analysts consider this when measuring a company's performance and future. Earnings Management (EM) is thought to have a detrimental impact on financial reporting quality by lowering decision usefulness [24]. There are numerous techniques to identifying earnings management, but accrual-based models, particularly discretionary accrual, are the most widely used. The key advantage of using discretionary accruals to monitor EM, according to advocates, is the relative ease of data collection and measurement. Furthermore, using regression models, it is possible to evaluate the impact of corporate factors on the extent of earnings management [1]. The key constraint of this methodology is how to differentiate between discretionary and non-discretionary accruals [26]. Furthermore, the model provides only an indirect estimate of FRQ. EM is commonly utilized in the measurement of FRQ. It is widely used by managers to change figures in financial statements [22]. According to them, EM occurs when managers use subjective judgment in financial reporting and transaction structuring to alter financial reports in order to mislead some stakeholders about the company's underlying economic performance or to influence contractual outcomes that rely on reported accounting practices. According to Elijah and Ayemere [20], EM arises as a result of the gaps and flexibility of accounting decisions permitted by the Generally Accepted Accounting Principles (GAAP). These flaws enable managers to select reporting techniques that allow them to make estimates and assumptions that suit their corporate environment or maximize their wealth. When managers utilize subjective judgments in financial reporting to alter financial reports, negatively impacting financial reporting quality, the discretionary accruals model as a measurement tool for FRQ becomes desired [1]. In support of the aforementioned assumption, important strands of the existing literature on FRQ have been proxied by EM, which examines managers' use of discretionary accruals to move reported revenue between fiscal periods. Separating non-discretionary accruals from total accruals yields the discretionary accruals. To that purpose, the current study employed the modified Jones model, which is supported by several accounting experts [27].

Audit Committee Size and Financial Reporting Quality

The size of the audit committee is an important component in increasing FRQ since larger audit committees are more likely to have access to a wide knowledge base and diverse skills, allowing them to perform their duties more successfully [28]. Regulatory organizations consider AC size to be an important factor in accounting procedure control. The Blue Ribbon Committee of 1999 in the United States, the ASX Corporate Governance Council of 2003 in Australia, and the Combined Code of 2008 in the United Kingdom all place a high value on the size of the Advisory Committee, recommending at least three members. The bodies should focus on ensuring the AC is fully staffed, according to the recommendations of a minimum number of members on the AC, with no higher limit [2]. However, the lack of obvious direction on a desirable size raises questions about what size AC will best serve shareholders' interests in advancing the broader financial reporting procedure. Similarly, Elijah and Ayemere [20] observe that larger ACs appear to improve earnings quality by lowering the likelihood of restating financial statements and so providing more control over financial reporting methods. The following hypothesis is proposed:

• Ho₁: Audit committee size has no significant relationship with EM practice by listed firms in Nigeria

Audit Committee Financial Expertise and FRQ

The audit committee's efficiency and able to discern and mitigate EM are thought to be enhanced by the availability of accounting and financial expertise. In their study, Kibiya, et al. [6] found that having a member with financial literacy or knowledge of accounting, finance, or financial management improves the quality of the financial report. Moses [13] did point out, however, that the competence requirement is broad in terms of definition. They argue that "financial competence" includes "certified public accountants, auditors, financial officers, and controllers," as well as "anyone who has worked in monitoring function involving financial statement production." Thus, expertise can be either technical or supervisory in nature, but the debate is over which type of knowledge is most important for audit quality. Is it supervisory/financial management or technical/accounting management? Jerry and Saidu [14] as well as Alkilani, Hussin, and Salim show that supervisory experience does not always convert to effective comprehension of accounting difficulties and may not guarantee audit quality. This is reinforced by Kamolsakulchai [29], who looked at different types of knowledge and concluded that only accounting expertise had a substantial impact on audit quality. Bala and Kumai [21] used AC financial expertise, as measured by the number of members with accounting competence, to control for audit quality in their study on audit firm reputation and audit quality. They discovered a small but positive link between audit quality and audit quality. Similarly, Ghazali et al. [17] discovered a minor positive correlation between AC expertise and audit quality. The proportion of members having financial and accounting experience to the overall board membership was used to measure expertise in their study. According to Karajeh and Ibrahim [23], AC with members who have the necessary financial experience are better equipped to understand the capital market consequences of financial statement judgments and disclosures. These disclosures are supposed to increase reporting quality and lessen the impact of information asymmetry on a company's value. As a result, AC quality is one of the CG features that is particularly sensitive, based on the expectation of the CCG in Nigeria that at least one person must be able to read and analyze the financial statement. It is used by directors as a control tool to improve the quality of the financial report [30]. Members of the AC were supposed to have financial skills and knowledge in auditing, according to researchers [25]. Proponents of the resource dependence theory also support the competence of AC members with financial understanding to uphold audit judgment. They stated that having financial expertise on the AC will lessen the committee's reliance on external auditors to ensure the accuracy of core accounting figures [31]. The following hypothesis is formulated:

• Ho₂: Audit committee financial expertise has no significant relationship with EM practice by listed firms in Nigeria

Shareholders Involvement in Audit Committee and FRQ

Shareholders in the AC may exert more control over the firm's AC functions in order to protect their investment. An AC made up of shareholders, according to Bajra and Ade, can improve decision-making. They also claimed that a committee with shareholding members is more inclined to dismiss external auditors who produce a going concern report since the influence of prediction is unclear in such reports, and so is more likely to disagree with the auditor [28]. Furthermore, because of the size of their holdings, significant shareholders in the AC are more likely to deliver successful AC performance. They are also in a better position to combat managerial myopia by encouraging managers to invest in successful long-term portfolios [32]. The rule requires shareholders to effectively play dual roles as owners and demonstrate the ability to manage financial reporting processes that result in quality financial reports that can be examined within an acceptable time frame [21]. Furthermore, as members of the audit committee, shareholders are motivated to restore the timeliness of financial reporting as well as the committee's and the company's overall image [17]. Investors and other stakeholders are increasingly interested in a company's timely financial report, and corporations with considerable shareholder equity have expressed worry [19]. Shareholders can effectively check Executive Directors (ED) powers related financial reporting activities and give protection to the auditor in fulfilling their duties with the addition of shareholders to the AC and the power of ownership [11]. Furthermore, the existence of shareholders has boosted public trust in financial reports [12]. In a similar spirit, stockholders' equity gives them definite power over the company's operations and allows for regular inspection [6]. According to previous research, there is a link between shareholder investment and financial reporting quality [5]. The following hypothesis is formulated:

• Ho₃: Shareholders involvement in audit committee has no significant relationship with EM practice by listed firms in Nigeria

Firm’s Size

One of the CG features associated with FRQ is firm size. In most audit study on reporting delays, it remains one of the variables of interest. Bala and Kumai [21] looked into the relationship between firm size and audit report lag and found that the larger the firm, the higher the audit quality sought from such firms, as size is linked to high agency costs. As a result, larger companies are more likely to be influential in terms of internal audits and higher accountability as a result of effective internal control, resulting in the timely release of financial reports [31]. Larger organizations can also pay more audit fees to more prestigious audit firms, such as Big4, in order to obtain a fast report, because they have more resources at their disposal [20].

The size of the company was found to be a significant factor in explaining disparities in corporate financial disclosure procedures [2]. A popular argument is that larger companies are more willing to release more information than smaller companies in order to defend their brand and prevent government interference [18]. According to Fakhari & Pitenoei [26], agency expenses are higher for larger enterprises due to their larger number of shareholders. As a result, large-firm executives are motivated to cut possible agency expenditures. One way to do this is to make more accounting data public. More substantial enterprises, according to Ghazali et al. [17], rely extensively on financial markets to raise capital.

Firm’s Age

Older companies are thought to reveal more information because they are more likely to have a well-established, well-organized professional staff to handle the technical parts of their financial statements [13]. Managers of younger companies also have less experience running a publicly traded company and complying with regulatory standards. As a result, according to Oussii and Boulila [16], younger enterprises' accounting processes are often insufficient, resulting in lower-quality accounting and disclosures. Older organizations, on the other hand, are more likely to have well-established accounting procedures as well as experienced management and personnel, resulting in better accounting and disclosures. The arguments for both positive and negative associations may be found in a theoretical explanation of the age-performance relationship. Older firms can benefit from accumulated knowledge in all critical aspects of the business (better technology, well-developed supply channels, well-established customer relationships, more accessible access to resources, better human capital, and lower financing costs), so the argument for a positive impact of age on performance is based on firm experience. Older organizations can profit from higher performance because they have more experience, abilities, and skills, as well as the benefits of learning [19]. Although the arguments presented earlier are persuasive, there are those that flow to explain the detrimental impact of a firm's age on its performance and the quality of its financial reports as well. They claim that as businesses grow older, they typically strive to codify decision-making procedures, making them more bureaucratic and limiting organizational flexibility and ability to make quick adjustments [9].

Review of Empirical Studies

The findings of empirical investigations on the association between AC size and FRQ are mixed. There was no significant link between AC size and FRQ according to Stephen et al. [12]. However, none of the research have recommended the ideal size of AC for financial reporting process monitoring. Inconclusive and conflicting results are found in studies that recommend a proper AC size in connection to other financial reporting outcomes. For example, while some studies have found that larger ACs are more likely to withstand management collusion pressures [23] and are better able to focus on the general financial accounting process [10], others have found that larger ACs increase the risk of material misstatement [8].

Previous studies have shown that collaborating with financial specialists improves the financial reporting process and improves the report's quality [23]. According to researchers and proponents of the agency theory, members of the AC with financial knowledge improve the AC's ability to effectively oversee external auditors' work, understand audit judgment, and resolve misunderstandings with management, reducing audit report lag. Similarly, financial specialists in the AC effectively improve risk management and internal control [33].

Furthermore, indirect evidence from previous study indicates that audit committee members who have an investment in the firm can effectively provide vigilance and high monitoring ability, which can lead to premium performance, quality financial reports, and timely delivery [20]. As a result, the audit committee's larger shareholders will have an incentive to implement sound corporate practice and supervise the managers. They can also improve the financial reporting process and ensure timely release within the deadline [6].

Agency Theory

Politics, economics, sociology, management, marketing, accounting, and administration are all examples of domains where agency theory has been applied. The agency hypothesis has sparked a flood of research into contract incentives for corporate employees, supervisors, and employees in general [20]. Based on the notion that the agent will pursue the shareholders' aims, the theory also explains the interaction between the principal and the agent. Bonding and monitoring fees, as well as a residual loss if the contract becomes more expensive than the benefit, are all costs associated with the partnership [8]. According to Ragab [7], there are two major issues relating to managers' behavior as a result of the separation of ownership and control: first, the possibility of a priority misalignment between the principals and the agents. Managers are thought to be utility maximizers who, if given the opportunity, will act in their own best interests at the expense of wealth owners or principles, and second, principals may have difficulty understanding the manager's actions or inactions. Principals are left with insufficient knowledge regarding the level of risk or profitability in their firm in instances like this, and hence are unconcerned about managers' contributions to the achievement of the firm's goals. Type I agency problems are the two instances described above. As a result, the principals are subjected to information asymmetry [5]. The rivalry between majority investors and minority owners, on the other hand, causes Type II agency problems.

As a result, the necessity for financial report disclosure arose from a desire to eliminate agency conflict and knowledge asymmetry between principals and agents [16]. The desire from investors for thorough, transparent, and trustworthy disclosure, especially in cases where the disclosed information is mandated, fueled the drive for disclosure to decrease agency costs and information asymmetry in financial reports. According to the agency theory, efficient CG mechanisms can reduce agency costs by increasing disclosure and lowering information asymmetry. Both principals and agents are motivated to invest in CG mechanisms targeted at decreasing agency costs associated with information asymmetry [21,34].

Research Design

This research employs a multi-method quantitative approach that includes descriptive and inferential statistics. Because it is based on a positivist research philosophy and a logical methodology, the method is suited. The paper investigates the impact of various key CG mechanisms on FRQ in Nigerian publicly traded companies, which are quantified and analyzed using a variety of statistical methodologies.

This study used historical evidence and acquired quantitative data and CG information from secondary sources, with a sample size of 41 enterprises. The study looked at non-financial enterprises in Nigeria over a nine-year period, from 2010 to 2020. The time period is relevant for this research since it was at this time that the World Bank re-evaluated the newly promulgated CG code, which was in effect from April 2011 until the SEC approved a revised CG code in 2018. For all observations, the study used two sets of data from the financial statements: the first set was used to quantify corporate governance variables, while the second set was used to measure FRQ using EM as a proxy. CG data were acquired from financial statements for the years under study in order to examine the samples. The impact of corporate governance and the FRQ was investigated to see how closely the two sets of variables were related throughout time. The study used both descriptive and inferential statistics using STATA 16 for the analysis of the result.

Study Model

Due to a variety of characteristics like as institutional elements, CG mechanisms, and legal systems, existing DA models have varying explanatory power in different countries around the world [4]. However, according to Fakhari and Pitenoei [27] the Jones model, modified Jones models by Dechow, and Kasznik model are the most reliable and consistent models for detecting manipulative financial reports using the manager's discretionary right of accounting methods choice and estimates.

Dechow et al. modified Jones model is also regarded as one of the best and most powerful models for assessing EM in Nigeria [32]. In the event period, the model recognizes accounting differences in income receivables. As a result, instead of manipulating profitability on cash sales, managers revert to manipulating earnings on credit sales. As a result of EM, the updated Jones model permits credit sales changes within the event period [33]. As a result, the modified Jones Model was adopted and employed in this investigation. The model is shown below:

• TACit:             EBITit - CFOit (1)

Where:

TAC is total accruals, EBIT is earnings before interest and tax minus CFO, which is the cash flow from operations for specific firms' year and industry represented by 'i' for industry and 't' for the year. The DA was calculated using the equation below:

= α₀+α₁ () +α₂ [] + α₃ () +εit

(2)

Where: 

• TA is the previous year's total assets 

• ΔREV is the change in revenue 

• ΔREC is the change in trade receivables 

• PPE is property, plant and equipment 

• Ɛ is the error term

Before estimating, Dechow et al. were used to subtract the change in accounts receivable from the change in revenue. The coefficients' parameters will then be estimated based on the industry and year's characteristics. a0, a1, a2, and a3 were computed using equation (2), and the non-discretionary accruals (NDAs) were determined using the equation below:

NDA = α₀+α₁ () +α₂ [] + α₃ () +εit

(3)

The total residuals of the DA is also found from the difference in the estimation of equation (3) and the actual accruals as depicted in the equation below: 

• DAit:               TACit – NDAit (4)

Where:

Non-discretionary accruals (NDA) and discretionary accruals (DA) are two types of accruals. As a result, in the equation below, the residual from the aforementioned model is employed as a metric for EM:

• DAit:                ƒ (ACSZE; ACFE; ACSH) (5)

In econometric form: 

• DAit:               β0 + β1ACSZEit + β2ACFEit + β3ACSHit + εit (6)

Adding control variables to the study, the model is represented as:

• DAit:               β0 + β1ACSZEit + β2ACFEit + β3ACSHit + β4FSZEit + β5FAGEit +εit (7)

Where: 

• FRQDA-it:     Financial Reporting Quality as measured using Earnings Management (Discretionary Accruals)

• β0:   Constant

• ACSZE:            Audit Committee Size

• ACFE:             Audit Committee Financial Expertise

• ACSH:            Shareholders Involvement in Audit Committee

• FSZE:              Firm’s Size

• FAGE:             Firm’s Age

• ROA:               Returns on Assets 

• FGRW:           Firm’s Growth

• β₁ β₁₃:            Coefficient of explanatory variables 

• ε:     Standard error 

• i:       Cross sectional (Companies)

• t:      Time Series (9 years)

A priori expectations in line with extant literature to be β1, β2, β3.>0

Descriptive Statistics of Continuous Variables 

Table 1 presents the result of the descriptive statistics of the continuous variables. It is described based on the minimum, maximum, standard deviation and mean values.

Table 1 shows how the MJM was used to estimate the Absolute Value for Discretionary Accruals (DA) and how absolute values were reported. The minimum and greatest values of DA are roughly 0.00025 and 0.36, respectively, with a mean of 0.28 and a standard deviation of 2.59. Based on a study conducted utilizing firms listed on the NSE and other studies in France [11] of about 0.06; and in the US Ragab [7] of 0.08, the value is greater than that of Bala and Kumai [21] of 0.24 and Sierra, et al. [10] of 0.19. This means that the percentage of managers that engage in opportunistic EM among NSE-listed companies has risen to 28% which is alarming, and thus, a cause for a great concern. The mean values for audit committee size (ACSZE), shareholders in audit committee (ACSH), and financial experts in audit committee (ACFE) are 5.69, 1.12, and 1.27, respectively, when stated in discrete data. Similarly, for each of the AC size, stockholders in AC, and financial specialists in AC, their lowest values are 4, 0 and 1, while their maximum values are 6, 2 and 2 accordingly. The standard deviations for the three variables are 0.67, 0.57, and 0.44, respectively, indicating a sensible and normal variation from the mean. This demonstrates that the majority of the firms followed the CCG requirements for audit committee size, which stipulated a maximum of six and a minimum of three members, as well as the presence of at least one financial expert among the AC members (section 11.4). (11.4.2). However, several corporations did not follow this criteria when it came to including shareholders in AC, as seen by a minimum value of 0 for ACSH in the table.

The mean value of the firm's age is 27.21, whereas the minimum and maximum values are 10 and 54, respectively, based on the mean of control variables assessed as discrete data. A Nigerian listed company has an average asset value of N123.31billion, according to firm size. The standard deviation is N1.92 billion, which is a normal difference because it is close to the mean. The data appears to be relatively normal based on the skewness and kurtosis values. The data set violated the parametric data test's normality assumption. In a similar vein, Inaam and Khamoussi [8] pointed out that even if the population is not normally distributed, if the sample size is high enough (>30), the means will have a roughly normal distribution.

Correlation Analysis 

Correlation analysis is an important approach in this study for determining whether or not there is a correlation between variables. Zero association is thought to show that there is no link between variables, hence there is no need to undertake study using such unrelated variables [34]. As a result, for a study to be undertaken, there must be either a positive or negative relationship between the dependent variable and all of the explanatory variables. As a result, correlation was used to determine the relationship between DA and FRQ as well as explanatory variables.

The correlation study yielded mixed results, with some variables having positive coefficients and others having negative values. The coefficients with significant positive values are ACFE and ACSZE 0.13, AGE and ACSH 0.12, FSZE and AGE 0.12. On the other hand, the coefficients with significant negative values are ACSH and ACSZE -0.10, AGE and ACFE -0.11.

Following Garcia and Uwuigbe, et al. findings of a non-zero correlation connection between FRQ and all explanatory variables, analysis was conducted on FRQ and all explanatory variables. Even if the correlation between FRQ and each of the independent variables appears to be weak, as the coefficients all fall under the (r) 0.3 limit, this flaw has no bearing on the regression results.

Dynamic Panel Results for Discretionary Accruals Model

The lagged dependent variable is significant at the 1% level of significance using lag one of three (1 2), and the coefficient value is 0.3247 when utilizing the second lag. Because it is unrelated to the present error term, the introduction of second lags became necessary. The initial lag, on the other hand, is linked. It's also utilized to locate appropriate instruments for model efficiency. As a result, the data show that the lag argument is appropriately given and that the instruments utilized are correct.

The results show that AC size has a significant relationship, with a p-value of 0.001 and a coefficient of -0.1325. On the econometric premise that other factors remain constant, it means that the numerical size of AC can reduce DA by -0.2184 on the econometric assumption that other factors remain constant. Therefore, the findings provide sufficient evidence to refute the premise that the size of the audit committee has no bearing on listed companies' EM practices in Nigeria. As a result, hypothesis 1 is unsupported. This study is in line with the findings of Saleh, et al. [19], who found that a larger audit committee is critical in preventing EM. Jerry & Saidu [14] discovered that the size of an AC and EM practice has a negative substantial impact. As a result, large audit committees had a beneficial impact on FRQ.

Table 1: Descriptive Statistics of Continuous Variables

Source: Computed by the researcher using STATA 16DA: Absolute Values for Discretionary accruals, ACFE: Audit Committee Financial Expertise, ACSH: Shareholders in Audit Committee, FSZE: Firm Size, FAGE: Firm’s Age.

Table 2: Correlation Matrix

Source: Computed by the Researcher using STATA 16 ***, ** and * represent significant level at 1%, 5% and 10% respectively.

Table 3: Discretionary Accruals Results using Dechow et al. Two-Step System GMM

Source: Computed by the researcher using STATA 16 *** p<0.01, ** p<0.05, * p<0.1, indicate significance levels

AC financial expertise shows a significant negative connection with p-value = 0.000 and a coefficient of -0.6022, according to the results. It demonstrates that having financial competence in the AC can lower EM by -0.6022 on the econometric assumption that other factors remain constant. As a result, the conclusion provides sufficient evidence to support the hypothesis that financial knowledge of audit committees has no substantial impact on EM practice by listed corporations in Nigeria. As a result, hypothesis 2 is unsupported.

The outcome supports the premise that ACFE, as activists and shareholders' representatives, can prevent opportunistic executive behavior and improve CG [5]. This research backs up previous research that looked into the impact of ACFE in improving the FRQ. They found that ACFE can help Nigerians cope with the effects of EM [34]. This finding is also consistent with resource dependency and agency theories. In terms of conflict resolution and resource allocation [14]. As a result, financial specialists in AC in Nigeria increase the pressure on managers to generate better financial reports.

The finding also reveals that shareholder involvement in AC has a substantial negative relationship, with a coefficient of -0.4205 and a p-value of 0.000. On the econometric assumption that all other factors remain constant, including shareholders in the AC reduces the extent of EM by a parameter value of -0.4205. As a result, there is sufficient data to suggest that ACSH has a major impact on EM. Both the agency and resource dependency theories' established theoretical assumptions are supported by the negative connection. As a result, hypothesis 3 is ruled out. When it comes to the control variables, the result for FSZE shows a significant negative link with a p-value of 0.000 and a coefficient of -0.1608. The negative correlation between FSZE and EM is in line with Ragab's findings [7]. Large companies are thought to be able to publish more qualitative financial information at a lower cost since they have the ability to collect and analyze the data.

With a p-value of 0.760 and a coefficient of 0.0016, FAGE suggests a positive and insignificant connection. This suggests that FAGE has a negative influence on the FRQ because the data demonstrate that FAGE increases the scope of EM by 0.760 on the econometric premise that all other components remain constant. This discovery is consistent with Kamolsakulchai's findings [29]. They discovered that as companies get older, their performance deteriorates, and that older companies have poorer productivity and profitability, which has an impact on their capacity to comply with the mandate of producing a qualitative financial report.

The shareholders in AC are zealous about protecting their investment against misuse, thus, they keep a careful eye on the managers' activities and study the financial reports thoroughly. This is because shareholders are unlikely to collude with managers in earnings smoothing in order to present a script-like performance in favor of the manager's financial report at the AGM. As a result, shareholder participation in AC is critical since it offers them confidence that the financial reporting are accurate and fair. This can also help to improve an organization's internal control system. As a result, shareholder participation in AC may provide the necessary oversight and restrict EM practices in NSE-listed companies. The result is consistent with the agency and resource dependence theories, as shareholder involvement in AC increases stakeholder confidence, lowers conflicts, and leads to resource inflow into enterprises.

As a result, the board of directors should appoint appropriate audit committee members with relevant financial knowledge, including shareholders. This will allow them to carry out their duties efficiently through competent oversight and provide a favorable environment for the statutory audit. This can also help to reduce reporting irregularities and boost public confidence in financial reporting quality.

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