Audit Committee Characteristics and Audit Quality

ABSTRACT

The purpose of this study was to examine the effect of audit committee characteristics and audit quality. The study adopted ex-post facto research design using annual reports of 80 non-financial organisations listed on the Nigerian Stock Exchange. The data for the study were analysed using descriptive statistics, Pearson correlation and Binary (Probit) regression technique. The dependent variable for the study is audit quality measured using Big 4 and Non-Big 4 while independent variable audit committee characteristics were measured using audit committee size, audit committee independence, audit committee meetings and audit committee financial expertise. The results from the Binary (Probit) regression technique showed that audit committee size was positive and significantly related to audit quality while audit committee independence was negative and insignificantly related to audit quality. In addition, audit committee meetings an audit committee financial expertise were both positive and insignificantly related to audit quality respectively. Based on the result the study concluded that audit committee characteristics significantly affect audit quality of non-financial organisations listed on the Nigerian Stock Exchange. The study recommends among others that the Audit committee size should be increased in order to accommodate more experienced and professionals in the audit committee and also be enhanced through the establishment of sound corporate governance policies and this will translate to higher audit quality.