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Attributes of audit committee and real activities manipulations of Nigerian quoted companies.

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This study investigated the impact of audit committee attributes on real activities manipulation (RAM) among listed companies in Nigeria. The study covered 14 years, from the year 2001 to 2014, and covered 74 listed firms. The study adopted a multimodel approach, using both primary and secondary data sources by firstly conducting a regression analysis, and secondly, using survey research to evaluate the results of the panel data regression analysis which provided a triangulation of the results. Relevant data (both financial and non-financial) were sourced from the annual reports of the sampled Nigerian companies using the INET BFA, Nigerian Stock Exchange (NSE) Factbooks, NSE libraries, Securities and Exchange Commission (SEC) library, sampled companies’ websites (for soft copies of published annual reports) and responses to questionnaires administered on all the current audit committee members of the sampled firms. The study investigated three types of RAM, which included sales manipulation, discretionary expenses manipulation and production cost manipulation. The aggregate or composite value of all three types formed the dependent variable of the study. Six audit committee attributes were investigated as independent variables: independence, financial literacy, frequency of meetings, multiple directorships, female directorships, and size. The study used both panel and logistic regressions in analysing the data. The results showed the prevalence of all the three types of RAM among listed firms in Nigeria. Both results (panel regression analysis and the logistic regression analysis) confirmed that manipulations of sales and discretionary expenses are the dominant nature of RAM. The results from the panel analysis indicated that three of the attributes, vis a vis, independence, frequency of meetings and female directorships are essential audit committee attributes that can constrain RAM practices. On the other hand, the logistic regression results also revealed that two attributes, independence, and frequency of meetings could significantly impact RAM. Audit committee independence and frequency of meetings are the attributes that have a negative significant influence on RAM in both results. The SEC (2003, 2011) codes were all not statistically significant in the panel regression results except in the logistic regression result. Therefore, the study recommends that audit committee members’ independence should be enhanced, and that the audit committees of other relevant agencies should give more attention to the cash flow analysis of companies to curtail the rising manipulation through sales among listed companies in Nigeria.


Doctoral Degree. University of KwaZulu-Natal, Durban.