MODERATING EFFECT OF AUDIT COMMITTEE FINANCIAL LITERACY ON EARNINGS MANAGEMENT AND THE VALUE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

The study examined the moderating role of audit committee financial literacy on earnings management and the value of quoted Nigerian banks. Correlation research design was adopted to define the structure and strategy of the study, while the target population was quoted Nigerian deposit money banks as at 31st December, 2020. Out of the 19 banks 14 were purposively
chosen based on their complete annual reports over the period of the study (2016-2020). Regression analysis was adopted in analyzing the collected data. Thus, the study found a positive and significant relationship between accrual earnings and returns on assets, and real earnings and returns on assets of the banks. However, audit committee financial literacy was found to negatively moderate earnings management and the value of the banks. This signifies that, the higher the audit committee members with financial literacy the lower the practice of earnings management among the banks. Therefore, the board of Nigerian quoted deposit money banks should increase the number of audit committee members with financial literacy skills. This can minimizes the practice of earnings management by the managers, hence improve firm value.