Impact of Audit Committee Characteristics on Profitability of Food and Beverages Firms in Nigeria

ABSTRACT

This study examines the effect of Audit committee characteristics on profitability of listed food and beverages firms in Nigeria. The study adopted an ex-post factor research design and used Audit committee financial expertise and audit committee meeting as independent variables to represent audit committee characteristic. It used return on assets, return on equity and earnings per share as the dependent variables to represent profitability. Data were collected from the annual financial statements of ten food and beverages industries listed on the Nigerian stock exchange (NSE) over a period of five years from 2012 to 2016. Multiple regression analysis was used to analyze the data. The results were that there is a negative and statistical significant relationship between audit committee meeting and return on assets (ROA) and return on equity (ROE), while audit committee financial expertise has a negative but no significant relationship with return on assets (ROA and return on equity (ROE). It also shows that audit committee financial expertise and meeting were positive but insignificant to earnings per share (EPS). It was recommended that, since  this research is limited to audit committee financial expertise and audit committee meeting of food and beverages firms listed on the Nigeria stock exchange, this may be resolved by choosing other proxies such as audit committee independence and audit committee size.

CHAPTER ONE: INTRODUCTION 

1.1 Background to the Study……………………………………………………….1  

1.2 Statement of the Problem ……………………………………………………...2

1.3 Objectives of the Study ………………………………………………………...3

1.4 Research Questions …………………………………………………………….4

Research Hypotheses ……………………………………………………...……5

Significance of the Study…………………………………………………….....5

Scope of the study ……………………………………………………………...7

 Limitation of the study …………………………………………………..…….8

 Definition of operational terms ………………………………………………..9

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 Introduction …………………………………………………….…………….11

2.2 Concept of Audit Committee…………………………………….……………11

2.3 Concept of profitability ………………………………………….…………...13

2.4 Theoretical Frame Work ……………………………………………………...14

2.4.1 Agency Theory ……………………………………………………………..14

2.4.2 Stakeholder Theory …………………………………………………………16

2.4.3 Stewardship Theory ………………………………………………………...18

2.4.4 Resource Dependence Theory………………………………………………19

2.5 Characteristics of Audit Committee and Previous Studies……………………21

2.5.1Audit Committee Financial Expertise and Profitability……………………22

2.5.2 Audit Committee Meeting and profitability……………………………….24

CHAPTER THREE: RESEARCH METHODOLOGY 

3.1 Introduction ...……………………………………………………………..26 

3.2 Research Design…………………………………………………………...26 

3.2.1Population of the Study……………………………………………...……..27

3.2.2Sample of the Study…………………..27

3.3Source and Method of Data Collection.........,.,.............................…….……27

3.4Validity and Reliability…….......………….28

3.5Techniques of Data Analysis…...…….29

3.6Definition of Variables……………………..30

Dependent Variables…………….………………….30

3.6.2Independent Variables…..………...31

3.6.3Control Variable………………….………32

3.7Model of Specification……………………..33

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS 

4.1 Introduction ………………......…………………..35

4.2 Data Presentation and analysis .………35

4.2.1Descriptive Statistics .……….…….36

4.2.2Model Summary ………….……………36

4.2.3Regression Coefficient tables...39

4.3 Test of hypotheses……………………………41

4.4 Discussion of findings...…………………...43

CHAPTER FIVE: SUMMARY, CONCLUSSION AND DISCUSSION OF FINDINGS

5.1 Summary of Findings…………………...…….48

5.2 Conclusion ……………………………………………49

5.3 Recommendation…….…..…………………….50

5.4 Suggestions for Further Research …..51

BIBLIOGRAPHY ..……………………………………...52

APPENDICES……………………………………………..59