CORPORATE BOARD ATTRIBUTES AND AUDITORS’ INDEPENDENCE: A STUDY OF LISTED DEPOSIT MONEY BANKS
ABSTRACT
External auditors occupy a unique position in the business community when they perform an audit for clients. The auditors are called upon to attest to financial statements and to safeguard the interest of various parties. However, in recent years the audit practice because of several scandals has been undermined. Although evidence of corporate governance practices and auditors’ independence exists from developed economies, very scanty studies have been conducted in Nigeria where corporate governance is just evolving. Therefore, this empirical study provides evidence on corporate governance, auditors’ independence, and firm related attributes from a developing country, Nigeria. The purpose of this study is to investigate the relationship between corporate board attributes and auditors’ independence measured by discretionary accruals. To do so, six (6) Listed Deposit Money Banks are selected and studied during the period 2006-2013. Board size and board composition are considered as corporate board attributes and profitability, leverage and size as control variables. The Ordinary Least Square Model estimation technique was used to analyze the relationship between the board attributes and auditors’ independence. The result of the study shows that there is no significant relationship between corporate board attributes and auditors’ independence of Listed Deposit Money Banks in Nigeria. The study therefore recommended that the board should be composed in such a way so as to ensure diversity of experience without compromising compatibility, integrity and independence.
Keywords: Corporate, Board Attributes, Auditors Independence, Deposit Money Banks
CHAPTER ONE
1.0 INTRODUCTION
The globalization of business practices and financial crisis brought corporate governance to the fore front of research. The increased attention on corporate governance has been motivated by the collapse of great corporations like World Com and Enron. The collapse of the Nigerian financial institutions was as a result of poor corporate governance standard, corruption and lack of transparency. Shareholders lost confidence totally in both public and private companies in the country as a result of weak corporate governance practice.
