Corporate Governance and Financial Reporting Quality of Listed Manufacturing Companies in Nigeria

Abstract

This study examined the influence of corporate governance mechanisms on financial reporting quality of listed companies in Nigeria. Specifically, the study investigated the influence of board size, board independence, audit committee size, and ownership structure on financial reporting quality. The study adopted a exposit facto research design and utilised data from 25 listed companies over the period 2016–2025. Financial reporting quality was measured using the modified Jones model, while board size, board independence, audit committee size and ownership structure served as the explanatory variables. Diagnostic tests revealed no serious multicollinearity, cross-sectional dependence or first-order serial correlation; however, heteroskedasticity was detected. Consequently, the study employed panel-corrected standard errors (PCSE) for estimation. The findings revealed that board size has a positive and significant influence on financial reporting quality, while board independence has a negative but insignificant influence. Audit committee size has a negative and insignificant influence at the 5% level, although the relationship is significant at the 10% level. Ownership structure has a positive and significant influence on financial reporting quality. The study concludes that corporate governance mechanisms have mixed effects on financial reporting outcomes among listed manufacturing companies in Nigeria. It recommends that companies and regulatory authorities should focus not only on the formal composition of boards and audit committees but also on their competence, independence, effectiveness and monitoring capacity to enhance the quality of corporate financial reporting.