THE ROLE OF AUDIT COMMITTEE DILIGENCE IN ENHANCING FINANCIAL REPORTING QUALITY AMONG NON-FINANCIAL FIRMS IN SUB-SAHARAN AFRICA

Abstract

The study aims to address the inconsistency and unreliability of financial Reports among listed firms in Sub-Saharan Africa, attributed to insufficient audit committee diligence, lack of expertise, and limited oversight resources. By examining the impact of audit committee diligence on financial Reporting quality, the study seeks to enhance understanding of corporate governance mechanisms in the unique context of Sub-Saharan Africa. The main finding highlights the significant positive effect of audit committee diligence on financial Reporting quality. The study employed a panel dynamic regression analysis, using secondary data sourced from annual Reports of 235 non-financial firms listed on the Nigerian Exchange Group, Johannesburg Stock Exchange, and Nairobi Stock Exchange from 2013 to 2022. The Generalized Method of Moments (GMM) regression model was utilized to account for endogeneity and heteroscedasticity issues, ensuring robust and reliable results. The analysis reveals that audit committee diligence, particularly the frequency and effectiveness of meetings, significantly enhances the quality of financial Reporting. The results indicate a positive relationship between the number of audit committee meetings and financial Reporting quality, as measured by Jones Discretionary Accrual, with a significant coefficient (0.041, p < 0.05). This underscores the crucial role of diligent audit committees in improving financial transparency and reliability. This study contributes to the existing literature by providing empirical evidence on the importance of audit committee diligence in the context of SubSaharan Africa, a region that has been largely overlooked in previous research. The findings offer valuable insights for policymakers, regulators, and stakeholders, emphasizing the need for robust governance mechanisms to enhance financial Reporting quality and foster economic growth. The study also lays the groundwork for future research to explore other dimensions of audit committee effectiveness.