Audit Committee Attributes and Real Activities Manipulation of Listed Manufacturing Firms in Nigeria

This paper examined the effect of audit committee attributes in deterring real activities manipulation of listed manufacturing firms in Nigeria for a period of six years (2008-­2013). The study used multiple regressions to analyze the data obtained from Annual Reports and Accounts of listed manufacturing concerns in Nigeria using the residuals of Roychowdhury (2006) to determine Real Activities Manipulation (RAM). Audit committees attributes were used as exogenous variables of the study. The finding reveals that audit committee attributes especially financial literacy is effective in restraining RAM, but other audit committee characteristics like independence, meeting, and size were found to be less effective in constraining RAM practice of listed manufacturing firms in Nigeria. Therefore, it is recommended that listed manufacturing firms should increase the proportion of members with financial acumen in the audit committee, because they are viable in constraining operational manipulative behaviour. Regulatory authorities like Securities and Exchange Commission, Nigerian Stock Exchange and Financial Reporting Council of Nigeria should embark on their surveillance and monitoring and ensure that, listed manufacturing firms are producing credible and reliable financial statements free from deception and window dressing in Nigeria for the consumption of various stakeholders