'Journal Of Accounting Finance And Auditing Studies (JAFAS)'
Doi
Abstract
PURPOSE: We herein investigate the effect of quality of audit on
management of earnings in Nigerian listed firms by (i) ascertaining
the effect of audit quality on discretionary accruals, (ii) determining
the effect of audit quality on earnings smoothing, as well as (iii)
establishing the effect of audit quality on earnings per share.METHODOLOGY: The study follows an ex-post facto research design. It
draws data from the annual reports of 10 firms. These consisted of
five financial and five non-financial firms, purposively selected for a
period of 10 years (2010-2019). Descriptive and inferential analyses
were employed in data analyses.FINDINGS: The findings indicate that audit quality significantly
affected earnings smoothing. Moreover, audit quality did not
significantly affect discretionary accruals and earnings per share.
Furthermore, it is recommended that management of firms should
put in place policies for predicting earnings (in profit) to help
forecast future earnings, which can be achieved by audit quality.ORIGINALITY/VALUE: This study is meant to raise awareness on the
need to improve the financial statement/reporting practices of
publicly listed companies with respect to earnings management;
discretionary accrual, earnings smoothing and earnings per share. It
is hoped that the forwarded recommendations support the
competent authorities in addressing the identified existing issues,
thus enabling them to enhance the financial reporting practices and
render them improved vehicles for development in publicly listed
companies.peer-reviewe