Board Size and Earnings Management of listed Deposit Money Banks in Nigeria Moderated by Audit Committee Expertise

This study examines the effect of board size on earnings management in Nigerian listed deposit money banks and assesses the moderating role of audit committee expertise. The study aims to provide insights into corporate governance practices and their implications for financial reporting quality in the banking sector. A quantitative approach was employed using an Ex-Post Facto research design. Secondary data were collected from the annual reports and NGX Fact Books of 10 listed deposit money banks from 2014 to 2023. The study utilized panel regression models with Ordinary Least Squares (OLS) and random effects estimation, conducted using Eviews version 10. Diagnostic tests such as Variance Inflation Factor (VIF), heteroscedasticity, and Hausman specification tests were performed to ensure robustness. The results revealed that board size has a negative but statistically insignificant effect on earnings management. Audit committee expertise exhibited a significant negative effect on earnings management, suggesting that greater expertise enhances financial reporting quality. Additionally, audit committee expertise significantly moderated the relationship between board size and earnings management, reinforcing the importance of audit committee competency in governance mechanisms. The study highlights the importance of strengthening audit committees to mitigate earnings management in Nigerian banks. The findings underscore the need for corporate governance reforms to enhance transparency and accountability. Regulatory bodies should enforce policies ensuring that audit committees comprise experts in finance, accounting, and auditing to improve financial reporting quality. Banks should adopt governance structures that foster independent oversight, thereby reducing earnings manipulation risks.