Content Analysis of the Effect of Audit Committee Characteristics on Earnings per Share of Quoted Companies on the Nigerian Stock Exchange 2006-2012

U. Modum, Robinson Onuora Ugwoke, Edith Ogoegbunam Onyeanu


The spate of corporate failures in recent times calls for serious examination of their causes and possible solution. Audit committees are statutorily compulsory component of the management of corporate organizations in Nigeria (CAMA 1990) and constitute a credible component of corporate government element. For quite some time now, audit committees have been instituted to add teeth to corporate governance in publicly quoted companies. In spite of this, corporate failures are still rampant. It becomes necessary to ask: how significant is the contribution of the audit committees to corporate performance of quoted companies in the Nigerian Stock Exchange. The earlier study had used opinion survey through a structured questionnaire administered on company administrators and managers to evaluate the relevance of the audit committee on corporate performance and   discovered that the quality of audit committee rather than its mere existence impacts on the performance of companies through a positive impact on corporate governance. This current  study  uses secondary data on corporate financial performance represented by earnings per share; as dependent variable and  Audit Committee sizes, Composition,  frequency of meetings ,and regularity of members’ attendance, as independent variables, all collected from annual financial reports of the companies quoted on the stock exchange within the study period to test the hypothesis that : Audit Committee size, composition and frequency of meetings have  significant positive effect on the financial performance of quoted non financial companies on the Nigerian Stock Exchange. The Micro soft Special Package for Social Sciences (SPSS) is used to do the regression analysis which showed that there is a significant positive relationship between the Audit Committee Size , composition, frequency of meetings, regularity of members’ attendance   and performance of quoted non financial companies as in the earlier study on perception. Most of the companies had very low financial performance and had ineffective Audit Committees. This study could not simply corroborate the earlier one because while the perception of the managers reflected their expectations of the role and impact of the audit committees, the reality on ground as shown by the relationship between the quality of audit committee and financial performance show that Nigerian companies have not really benefited from the existence of these audit committees. Critically, these firms generally score very low in these indices hence their equally low earnings per share. Therefore, like in the previous study the recommendation is being made that  the entire legal and regulatory framework together with the necessary institutional and environmental architecture for proper constitution and operation of an efficient Audit Committee should be maintained at all times to enhance corporate governance and improve financial performance of listed companies on the Nigerian Stock Exchange.

Keywords: Audit Committee, Corporate Governance, Control, Corporate Performance

Full Text: PDF
Download the IISTE publication guideline!

To list your conference here. Please contact the administrator of this platform.

Paper submission email:

ISSN (Paper)2222-1697 ISSN (Online)2222-2847

Please add our address "" into your email contact list.

This journal follows ISO 9001 management standard and licensed under a Creative Commons Attribution 3.0 License.

Copyright ©