EARNINGS MANAGEMENT AND AUDIT QUALITY OF LISTED MANUFACTURING COMPANIES IN NIGERIA

The study examined the relationship between audit quality and earnings management in selected manufacturing firms in Nigeria. The study focuses on four major indicators of audit quality, namely audit firm size, audit tenure, audit fee, and audit independence. Data used for the study were obtained from the published annual report of selected manufacturing firms, while regression analysis was used to test the hypotheses at 5% level of significance. The findings showed that audit firm size has a significant negative effect on earnings management, as indicated by a t-value of -2.240854 and a probability value of 0.0162. this implies that larger audit firms help in reducing earnings management manipulation because of their experience, competence, and reputation. The results also revealed that audit tenure has a significant negative relationship with earnings management with a t-value of -1.078057 and a p-value of 0.2828, suggesting that auditors who have spent more time with a client are better able to understand the firm operations and detect irregularities. In addition, audit fee was found to have a significant positive effect on earnings management, with a t-value of 2.44459 and a pvalue of 0.0264. This suggests that high audit fees may affect auditor may affect auditor’s objectivity and increase the tendency for earnings manipulations. Audit independence also showed a significant relationship with earnings management, with a t-value 2.1407 and a p-value of 0.0340, indicating that weak auditor independence may encourage earnings management practices. The study concluded by audit quality plays an important role in reducing earnings management among manufacturing firms in Nigeria. The study therefore, recommended stronger regulatory monitoring, improved auditor independence, and the engagement of competent audit firms to improve the quality of financial reporting.