Board of Directors’ Independence and Accrual Quality of Quoted Manufacturing Firms in Nigeria

Abstract

This study investigated the relationship between board of directors’ independence and accrual quality of quoted manufacturing firms in Nigeria. Ten years period (2008 to 2017) was captured. The operational variables included board of directors’ independence and accrual quality; internal audit quality and auditor independence were control variables. Ex-post facto methodology covered the research design in which panel secondary data were extracted from the annual fact-book of 56 sampled out of 65 quoted manufacturing firms in Nigeria Stock Exchange. Multivariate regression analysis using E-view 10 statistical version software was carried out on the data collected from 560 firm year observations. The results from the tested hypothesis showed the following: Board of directors’ independence and accrual quality had a positive and significant relationship; the internal audit quality and auditor independence which were control variables showed a positive and insignificant relationship. The study concluded as follows: that if board of directors’ independence increased by a large proportion, accrual quality also increased by the same large proportion. The study recommended amongst others that shareholders of quoted manufacturing firms should boost the current percentage in the appointment of non-executive directors.