AUDIT CHARACTERISTICS AND EARNINGS MANAGEMENT IN NIGERIA: EVIDENCE FROM PUBLICLY LISTED INSURANCE FIRMS

This study examines the correlation between the earnings of a selection of firms listed on the Nigerian Exchange Group and the characteristics of auditors. The data originated from the audited annual reports and accounts of seventeen (17) insurance companies from 2014-2024, and an ex-post facto design was used. For the listed insurance firms, secondary data on the auditors' characteristics (audit fees, audit size and auditor independence score) and earnings management metric (proxied by discretionary accrual) were computed. The ordinary least square regression methodology was used to analyse the collected data and findings indicated a strong positive correlation between audit size and earnings management. Furthermore, a positive and robust relationship between auditor independence score, audit fees and earnings management was established. Based on the findings, the study recommends the need to increase auditors’ independence so as to mitigate the negative effect of earnings management. Independence of the auditor should not be compromised in order to to produce highquality financial reports free from earnings manipulation. Also, the study recommends against raising auditors' fees because it hinders their ability to demonstrate their professionalism and expertise and quickly undermines their audit function or role; this will help auditors reduce earnings management techniques because their reputation would be at risk due to jealousy's influence on their established reputation.