EFFECT OF AUDIT COMMITTEE CHARACTERISTICS ON THE FINANCIAL PERFORMANCE OF LISTED MANUFACTURING FIRMS IN NIGERIA

Abstract In contemporary accounting, audit committees have gained significant prominence as a critical component in ensuring transparency, accountability, and financial integrity within organizations. As such, the effectiveness of audit committees has become a subject of increasing interest, particularly in the context of their influence on financial performance. This study therefore examined the effect of audit committee characteristics on financial performance of listed manufacturing firms in Nigeria from 2012 to 2022. The proxy for audit committee characteristics is audit committee size, audit committee independence, audit committee frequency of meetings, audit committee financial expertise and audit committee board gender diversity. Financial performance was proxy using Return on Asset (ROA) and Return on Equity (ROE). The control variable used in the study is firm size which was proxy as total asset. The study used secondary panel data which were sourced from the audited annual report of manufacturing firms in Nigeria. A sample of 47 firms was used in the study. The null hypotheses were tested using fixed random effect which was determined by the Hausman test. The findings showed that Audit committee size has an insignificant positive effect on financial performance (ROA and ROE) of listed manufacturing firms in Nigeria. Audit committee independence has an insignificant positive effect on financial performance (ROA and ROE) of listed manufacturing firms in Nigeria. Audit committee frequency of meetings has an insignificant negative effect on financial performance (ROA and ROE) of listed manufacturing firms in Nigeria. Audit committee financial expertise has a significant positive effect on ROA. In contrast, the result is insignificant and negative on ROE of listed manufacturing firms in Nigeria. Audit committee gender diversity has a significant negative effect on financial performance (ROA and ROE) of listed manufacturing firms in Nigeria. Based on this, the study recommends that manufacturing enterprises should prioritize financial skills across the organization. This encompasses the finance department, management staff, and board of directors. Improving key personnel's financial acumen and talents will result in more accurate financial reporting, better financial decision-making, and overall financial performance.