MODERATING EFFECT OF FIRM SIZE ON THE RELATIONSHIP BETWEEN AUDIT COMMITTEE ATTRIBUTES AND CORPORATE FRAUD OF LISTED MANUFACTURING FIRMS IN NIGERIA

Abstract

Corporate fraud poses a persistent threat to the integrity and sustainability of listed manufacturing firms, particularly in emerging economies like Nigeria where governance structures are evolving. Hence, the need to investigate the moderating effect of firm size on the relationship between audit committee attributes and corporate fraud of listed manufacturing firms in Nigeria for the periods of 2014 to 2024. The main objective was to examine how firm size conditions the impact of audit committee gender diversity, meeting frequency, and independence on corporate fraud, measured by the Beneish M-Score. Adopting a longitudinal research design, the study employed a quantitative panel data approach. The population comprised all 38 manufacturing firms listed on the Nigerian Exchange Group. Using a filtering sampling technique to exclude firms listed after 2013, a final sample of 36 firms was analyzed over an eleven-year period. Secondary data was extracted from audited annual reports. The data was analyzed using Fixed Effects panel regression, selected via the Hausman test, with diagnostic checks for multicollinearity, heteroskedasticity, and serial correlation. The findings revealed that audit committee gender diversity had a significant negative effect on fraud, while audit committee meeting frequency also demonstrated a significant negative effect, but these effects diminished as firm size increased, as shown by the positive and significant interaction terms. Conversely, audit committee independence had a positive main effect, but a significant negative interaction with firm size, indicating independence becomes a potent fraud deterrent only in larger firms. The study concludes that firm size is a critical moderator, transforming governance effectiveness. It recommends that regulators move towards scalable, size-contingent governance codes and that firms tailor their audit committee structures to their specific scale to optimize fraud prevention.