Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4, 574-587 2025 Publisher: Learning Gate DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate © 2025 by the authors; licensee Learning Gate History: Received: 14 January 2025; Revised: 28 March 2025; Accepted: 2 April 2025; Published: 7 April 2025 * Correspondence: majape@uj.ac.za Earnings management in non-financial firms in Nigeria: Does audit quality matters? Ajape, Mohammed Kayode1*, Adelowotan, Michael O2 1,2Department of Accountancy, School of Accounting, College of Business and Economics, University of Johannesburg, South Africa; majape@uj.ac.za (A.M.K.) madelowotan@uj.ac.za (A.M.O.) Abstract: The efficacy of the audit function has been questioned due to several instances of financial statement manipulation reported worldwide, which has eroded stakeholders’ confidence in the affairs of listed companies in Nigeria. Audit quality has been identified in the literature as having the potential to reduce earnings management practices. The purpose of this research is to examine the relationship between audit quality and earnings management strategies in publicly traded non-financial companies in Nigeria. An ex-post facto research methodology utilizing a purposive non-probability selection method was implemented to choose a sample of 30 publicly traded companies on the Nigerian Exchange Group (NGX). Data was extracted from the audited financial reports of the selected organizations for a ten- year period (2012-2021). The random effects regression model indicated that the audit quality criteria did not significantly influence the actual earnings management practices of the studied organizations. It is concluded that the Big4-non-Big4 dichotomy, the quantum of audit fees paid, the length of the auditor-client relationship, and the engagement of an industry-specialized auditor would not significantly prevent or reveal the occurrence of real earnings management in the listed non-financial firms in Nigeria. We recommend that firms should downplay the significance of an audit firm's size when engaging its services. Future researchers may consider other parameters and proxies of audit quality. The study extends scholarly discourse on earnings management-audit quality interactions to bolster the understanding of shareholders and other stakeholders regarding the implications of this nexus. Keywords: Audit fee, Audit firm size, Auditor’s industry specialisation, Auditor’s tenure, Real earnings management. 1. Introduction The rendition of an account of an organisation's operations during a specific reporting period is a crucial factor for evaluating the diligence of people in charge of its affairs. Thus, financial reporting aims to present financial data through financial statements concerning the organisation’s activities and operations within a reporting period, usually a 12-month calendar. According to Tyokoso, et al. [1]; Lopes [2] and Alao and Gbolagade [3] financial statements information is essential for the users, including investors, competitors, supervisory bodies, and so on to make informed economic judgments regarding a firm’s activities. Therefore, accuracy and level of dependability of such sensitive information, through quality audit must be ensured to boost users' assurance. Audit quality revolves around adding credibility to audited financial statements by identifying and reporting significant inaccuracies in line with the provisions of auditing standards issued locally and internationally [4, 5]. Over the years, concerns have been raised globally regarding factors that drive, impair and advance the quality of audits, presumably because a high-quality audit would reflect in the resulting audit opinion as well as boost public confidence [6-8]. Factors such as pressures on auditors to meet deadlines, restriction of audit fees, and extreme usage of judgment contribute to the rise of audit 575 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate failures in Nigeria. However, audit quality could be improved by mandatory rotation of auditors and restriction of non-audit services [9]. There have been instances where companies have been accused of earnings management, leading to investigations and penalties by regulatory authorities. For example, in 2017, the Nigerian Stock Exchange p (NGX) fined 11 listed companies for non-compliance with post-listing requirements, including earnings management problems. Also, the case of Oando plc in 2017 involved insider dealings and manipulations of the company's shareholding structure, leading to gross abuse of corporate governance and financial recklessness. Other notable past cases in non-financial firms in Nigeria include the Nigerian National Petroleum Commission (NNPC) in 2013 and Cadbury plc in 2006 [1, 10]. Globally, notable cases of earnings manipulation and audit failure include Corman, et al. [11]; Kemmerer and Shawver [12] and Coffee Jr [13]. Bala and Kumai [14]; Madawaki and Amran [15] and Alhassan, et al. [16] believe that these instances have raised concerns amongst stakeholders regarding the accuracy and reliability of the accounting records and have prompted questions about the capacity of audits to unearth earnings manipulation. Previous empirical studies Alhassan, et al. [16] and Abubakar, et al. [17] have sought to gauge earnings management through discretionary accruals. However, the use of discretionary accruals is riskier to the company and easily detectable by auditors [5, 18]. This risk of detection increases the likelihood that firms may consider switching to real earnings manipulation. The ever-increasing prices of goods and services occasioned by the removal of fuel subsidies in Nigeria could provide yet another robust platform for firms’ engagement in natural earnings management by manipulating their actual operations. Furthermore, with the phenomenon of earnings management prevalent in some Nigerian banks, some prior studies Ozcan [19]; Ceccobelli and Giosi [20]; Umoren, et al. [21] and Saidu, et al. [22] had concentrated on the financial sub-sector while the evidence of the few research done in the non-financial sector have remained inconclusive. These voids in the literature provide the necessary impetus for the current study. Our study extends discussion on earnings management and audit quality nexus by exploring the concept of real earnings management, displaces the preponderant notion of audit quality having a declining effect on earnings management and established that in uncovering real earnings management, size, quantum of audit fees paid, length of auditor-client relationship and engagement of industry-specialized auditor offer no significant influence. 2. Literature Review 2.1. Earnings Management Among the frequently debated ethical issues in the accounting, auditing, and corporate governance literature is earnings manipulation due to the impact of its effects on the decisions made by users of accounting information. Kwarbai and Osho [5]; Abubakar, et al. [17] and Olthof [23] asserted that earnings management is a deliberate modification of or deviation from financial reporting processes to misinform stakeholders concerning the fundamental financial success of an organisation. These studies imply that management engages in earnings management practices for their incentives at the detriment of innocent and unobserving stakeholders, breaching management’s fiduciary responsibilities to the stakeholders and thereby affecting the integrity of financial reports presented by the organisation. Management can manage earnings through discretionary accruals or absolute earnings manipulation methods. Real Earnings Management (REM) surfaces when directors make operational decisions that enhance present earnings but upset the interest of long-term shareholders either for managerial opportunism or to signal future performance [24]. REM could be achieved by altering reported earnings through overproduction, lowering the cost of goods sold, or reducing discretionary expenses [18, 25]. Previous researchers, such as Oyebamiji [4]; Ozcan [19] and Chituru, et al. [26] have primarily utilised discretionary accruals to gauge earnings manipulation, believing that this method best detects earnings manipulation in corporate reporting. Likewise, Cohen and Zarowin [27] and Zang [28] 576 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate proved that directors switch to manipulating real activities once accrual earnings management becomes more challenging to accomplish. However, studies by Eriabie and Dabor [29] and Abubakar, et al. [17] assert that managers resort to the manipulation of sales, overproduction of inventory, decreasing optional expenses such as research and development cost, and reduction of optional expenses to get rid of losses. 2.2. Audit Quality Over the years, it has been challenging to reach an agreement on a universal description or measurement of audit quality [30]. However, audit quality refers to the probability, as assessed by the market, of an auditor identifying and disclosing a violation or misrepresentation within a client's accounting system [5, 17, 23, 31]. Thus, an auditor's effectiveness in conducting high-quality audit work is contingent upon his technical capabilities, independence, and objectivity. Audit independence, as explained by Soyemi, et al. [32] and Ozcan [19] connotes auditors' boldness and confidence in reporting false representations, either by a qualified declaration or negative reviews if such misstatements are left unadjusted by management. The capacity of an auditor to discover a misnomer is referred to as proficiency, while his ability to report the misnomer detected is referred to as objectivity or independence. From another lens, Ahmad, et al. [33]; Alao and Gbolagade [3] and Kurawa and Aca [34] view an audit's capacity to enhance the accuracy with which investors may evaluate the value of a firm's financial statements as audit quality. This perspective is so because fewer audit blunders are directly related to high-quality auditors, who would more likely issue going-concern audit reports to deserving auditees than to undeserving ones [35]. This complicated phenomenon has been widely measured in various forms. One approach to measuring audit quality is the input-output approach emanating from the credibility of financial reporting of client companies and observable auditor attributes. As argued by Aobdia [36] the other approach involves a detailed examination of the audit process as perceived by audit firms and regulators. These direct-indirect metrics include the audit fees, audit firm size, auditor's expertise, auditor's familiarity with/expertise in the sector, and capital expense Mohapatra, et al. [8]; Bell, et al. [37] and Gaynor, et al. [38] and amenability with the Generally Accepted Accounting Practices (GAAP), Securities and Exchange Commission’s performance review, quality control review, and bankruptcy test review [36]. Several studies, such as those of Ahmad, et al. [33]; Almomani and Ayedh [39] and Tyokoso and Tsebga [40], used common proxies like auditor’s size, auditor’s focus on an industry, and span of the auditor's engagement to measure the standard of the audit. Others have also used mandatory audit partner and firm rotations, audit fees, and audit tenure to gauge audit quality [6-8]. The referenced authors adopted these audit firm/auditor attributes due to the presupposition that they are effective in accurately determining the degree of the quality of the audit performed and their ability to detect a misnomer. According to Kurawa and Aca [34]; Nawaiseh [41] and Yasser and Soliman [42] audit quality becomes imperative as management may manipulate the values reported in accounting reports or use loopholes in accounting methods to create a desirable public image for the firm. 2.3. Audit Fees Audit firms, regulators and academic researchers share common ground in identifying sub-quality audits through audit fees as surrogates of audit quality [36]. An audit fee is a monetary value received by auditors and their firms from clients for rendering audit/professional services [43]. This audit fee includes fees receivable for completing an audit assignment and certification of an entity’s financial statement; reporting on directors' remuneration, and for work done to comply with the auditor's responsibilities under the law and auditing standards PWC [44] and should be determined mutually between the auditee and audit firm [43]. Clients may sometimes require an auditor’s expertise to provide non-audit services such as tax, payroll, valuation, advisory, and legal services. Non-audit services are additional services an auditor provides to clients in addition to standard auditing engagements to generate extra revenue [45, 46]. An auditor must pay attention to non-audit services 577 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate rendered to the client and objectively determine the audit fee to prevent interference with the auditor's independence. This concern is so because the consequent economic tie between auditor and management arising from high audit fees could undermine the auditor's independence and consequently create room for financial statements' manipulation [5, 29, 47]. Thus, earnings quality may wane with increased audit fees Ye [43] as audit fees exhibit a positive association with earnings management [48]. On the contrary, higher audit fees are aligned with higher-quality financial reporting, which reduces auditees' earnings management [49]. Hypothesis 1: Audit fees do not affect earnings management practice. 2.4. Auditor Tenure The time auditors spend rendering professional services to clients is called "auditor tenure". It reflects the duration of an auditor-client relationship in years. Over time, there has been much discussion over the connection between an auditor's tenure and earnings manipulation. Gul, et al. [50] summarised the three dimensions of the tenure-earnings relationship thus: audits of lower quality could result from a lack of expertise in client-related affairs, and low-balling (intentional lowering of audit fees than audit costs) leads to low-quality audits, while firms with higher quality earnings would retain higher-quality auditors. Consequently, companies with higher quality earnings may likely have lengthy relationships with their auditor, while short tenure results in a lack of in-depth knowledge of the client, hence low-balling. Since lengthy auditor tenure may likely improve or reduce earnings manipulation, researchers have investigated this assertion, but the results have remained inconclusive. For instance, Garcia‐Blandon, et al. [7]; Martín-Cervantes and Valls Martínez [49]; Jadiyappa, et al. [51] and Martín-Cervantes and Valls Martínez [49] have expressed the position that an extended duration of audit engagement allows the auditor to become more acquainted with the systems of internal control of the client which would facilitate detection of earnings management practices and ultimately reduce the occurrence of such practices. In contrast, Soyemi, et al. [32]; Kurawa and Aca [34]; Nawaiseh [41]; Tepalagul and Lin [52] and Tran, et al. [53] concluded that a lengthier audit tenure could lead to increased earnings management, as independence of the auditor may be compromised. This potential threat to independence could influence the auditor's ability to form unbiased opinions on the client's financial statement assertions leading to a possibility of high information asymmetry [32, 54, 55]. Hypothesis 2: Auditor's tenure does not have any significant effect on earnings management practice. 2.5. Auditor Industry Specialisation Industry-specialised auditors are experts who possess in-depth knowledge of a particular industry because of long years of experience in such an industry. They tend to perform better in a specific industry compared to their counterparts. According to the findings of Havasi and Darabi [56] and Jayeola, et al. [57] there is an expectation that auditors specialising in specific industries possess enhanced capabilities as they invest more in information technology, personnel training, and development and will endeavour to protect their reputation, which would reflect in the reliability of financial reporting. Audit companies can regulate client firms' earnings management methods and reduce audit risks with industry-specific expertise [50, 58]. Complex company operations necessitate auditors who are well-versed in the features of the industries in which they operate. Hypothesis 3: Auditors’ industry specialization plays no role in uncovering earnings management practices. 2.6. Audit Firm Size [3, 42, 46, 59]. Opined that the size of the audit firm is one of the most relevant indicators for assessing the excellence of the external audit. The respective studies separated audit firms into big4 and non-big4. The big4 audit companies are regarded as prestigious firms that consistently supply 578 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate worthy audit services due to their knowledgeable and experienced staff. They achieve this prominence because they have a broader clientele base, which means that their sources of income are not impacted by one client, thus increasing their independence. In contrast, the non-big4 firms’ incomes are presumably based primarily on audit fees charged to specific clients, and hence, they would rely more on the fees charged to their clients. Ultimately, lower-quality earnings are widespread in companies with weak governance structures and audited by non-big4 companies [60]. However, a contrary view Soyemi, et al. [32] and Tran, et al. [53] exists that smaller-sized audit companies may conduct higher- quality audits than larger ones. Hypothesis 4: Audit firm's size does not influence earnings management practice. 2.7. Theoretical Framework 2.7.1. Agency Theory Stephen Ross and Barry Mitnick were the earliest proponents of the theory of agency [61]. Agency theory, analysed through economic and institutional lenses, delineates the linkages and associated issues arising from the principal-agent conflict of interest due to the separation of ownership from management Mitnick [62]. Jensen and Meckling [63] consider this as a contract where the principal engages agents to act on their behalf. The principal also gives the agents some degree of freedom in making decisions. Impliedly, this could give rise to a possibility of high information asymmetry [32, 54, 55]. According to Saidu, et al. [22] and Chituru, et al. [26] the theory depicts the misalignment of interests occasioned by disproportionate information which may occur between the investors and managers. Therefore, since managers (agents) are responsible for providing stewardship functions to the owners, there is a strong likelihood that they will manipulate earnings to present a positive view of their performance to the owners (principal). This possibility of earnings management gives rise to the need for independent verification of the assertions made by the management in the financial statement by an external auditor. The limitation of this theory is its narrowness, focusing mainly on the interests of the shareholders, whereas managers are accountable to all stakeholders [55]. 3. Methodology We adopt an ex post facto research design to gather and evaluate pertinent data based on already- known facts. Secondary data was retrieved from the annual reports of 30 non-financial organisations listed on the Nigerian Exchange (NGX), from 2012 to 2021. This translates to 300 firm-year observations. A purposive sample based on the companies’ relative size and listing status from 2012 to 2021 was taken. The 30 sampled non-financial firms were from agriculture, conglomerates, consumer goods, healthcare, ICT, industrial goods, natural resources, oil and gas, real estate, and services sectors. This sample represents 28% of the total listed non-financial firms as of June 2023. This sample size aligns with the n ≥ 30 thresholds [32]. 3.1. Measurement of Variables 3.1.1. Dependent Variable: Earnings Management We denoted earnings management using the real earnings management (REM) approach following Roychowdhury [64] formula and consistent with Financial Reporting Council of Nigeria [65] as stated below: “REM = Abnormal cash flows + Abnormal Production cost + Abnormal Discretionary Expenses.” Where “abnormal cash flow from operation, abnormal production cost, and abnormal discretionary expenses” represent the difference between actual values stated in the annual reports and the calculated or normal value. The normal or calculated operating cashflow, production cost, and discretionary expenses are the computed figures using the formulae below: CFOAt/At-1= β0 + β1(1/At-1) + β2(St/At-1) + (ΔSt/At-1) + Ɛit (1) 579 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate PROCOt/At-1 = β0 + β1(1/At-1) + β2(St/At-1) + (ΔSt/At-1) + (ΔSt-1/At-1) + Ɛit (2) DISCREXt/At-1 = β0 + β1(1/At-1) + (ΔSt-1/At-1) + Ɛit (3) Where CFOAt is cash flow from operating activities in year t, At-1 is total assets in year t-1, St is sales in year t, ΔSt is sales of the firm in year t minus sales in year t-1, PROCOt is the production cost, ΔSt-1 is sales in year t-1 minus sales in year t-2, DISCREXt is the discretionary expenses, the sum of selling, general and administrative expenses in year t; all other elements remain as described. 3.1.2. Independent Variable: Audit Quality We measured audit quality using audit fees, auditor’s tenure, size of audit firm, and auditor's industry specialisation as proxies. 3.1.3. Control Variables Some other factors [in line with Ashraf & Qian, 63] that may impact earnings manipulation, such as leverage, company size, and foreign affiliation, were used as control variables. Table 1. Description and Measurements of Variables. Variable Name Type of Variable Measurement Sources A-priori Expectations Real Earnings Management (REM) Dependent Summation of standardised differences between actual and computed normal CFOA, normal PROCO, and normal DISCREX. Kwarbai and Osho [5]; Bello and Ugoh [18] and Roychowdhury [64] Audit Fees (AF) Independent Logarithm (ln) of audit fees Kwarbai and Osho [5] andEriabie and Dabor [29] Positive (+) Auditor’s Tenure (AT) Independent Measured with the duration of the client-auditor relationship, 1 if > = 5 years; otherwise, 0 Soyemi, et al. [32] and Nawaiseh [41] Negative (-) Audit Firm size (AS) Independent Measured with a dichotomous value of 1 for firm audited by a big4 auditor and 0 if otherwise Alao and Gbolagade [3] and Affes and Smii [46] Negative (-) Auditor’s Industry Specialisation (AI) Independent Measured with a dummy variable, 1 if the auditor has industry experience, 0 if otherwise Havasi and Darabi [56] and Jayeola, et al. [57] Negative (-) Leverage (LEV) Control Measured by dividing Debts by Equity Olthof [23] and Almomani and Ayedh [39] Positive (+) Firm Size (FSIZE) Control Represented with the natural log of total assets Abubakar, et al. [17] and Ozcan [19] Negative (-) Foreign Affiliation (FA) Control A firm with foreign affiliation is assigned a score of 1, while 0 is assigned to the non-affiliated firm. Ashraf and Qian [66] Positive (+) 3.2. Model Specification In order to investigate how audit quality affects earnings management in the sampled non-financial firms in Nigeria, the following is the panel data model created by this study. REMit = β0 + β1AFit + β2ATit + β3ASit + β4AIit + β5LEVit + β6FSIZEit + β7FAit + Ɛit ……..(iv) Where: REM = Real Earnings Management of firm i in year t AF = Audit Fee of firm i in year t AT = Auditor’s tenure of firm i in year t FA = Foreign Affiliation of firm i in year t AS = the size audit firm i in year t 580 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate AI = Auditor's industry specialisation of firm i in year t LEV = Leverage of firm i in year t FS = Firm size of firm i in year t β0 = constant of the coefficient Ɛ = the error term β1 – β7 = Variable coefficient 4. Results and Discussions In this sub-section, we present the empirical results of the study. This includes both the descriptive and inferential statistics. 4.1. Descriptive Statistics Table 2. Summary of Descriptive Statistics for the Variables. REM AF AI AS AT FA FSIZE LEV Mean 2.114342 16.80865 0.966667 0.680000 0.370000 0.500000 23.81680 1.610243 Median 1.660459 16.97272 1.000000 1.000000 0.000000 0.500000 24.08402 1.421950 Maximum 16.47078 20.36230 1.000000 1.000000 1.000000 1.000000 28.01786 13.51190 Minimum 0.000000 12.90038 0.000000 0.000000 0.000000 0.000000 0.000000 -22.49849 Std. Dev. 1.998979 1.395825 0.179805 0.467256 0.483611 0.500835 2.531195 2.320655 Skewness 3.769594 -0.184731 -5.199469 -0.771744 0.538520 0.000000 -3.005392 -3.214939 Kurtosis 22.47257 3.724085 28.03448 1.595588 1.290004 1.000000 27.83073 47.04161 Jarque-Bera 5450.253 8.260018 9185.791 54.43407 51.05128 50.00000 8158.683 24762.58 Probability 0.000000 0.016083 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 Sum 634.3026 5042.594 290.0000 204.0000 111.0000 150.0000 7145.040 483.0728 Sum Sq. Dev. 1194.779 582.5495 9.666667 65.28000 69.93000 75.00000 1915.677 1610.246 Observation 300 300 300 300 300 300 300 300 4.1.1. Interpretation of Descriptive Statistics Table 2 shows that earnings management, as determined by manipulating actual activities, has a 2.1% mean value and 1.9% degree of variation, respectively. This infers that 2.1% of the firms engaged in real earnings management during the period concerned. The degree of variation of 1.9% signifies a slight disparity in the data from the mean. Audit fee (AF) has a range of 12.9004 (in millions of Naira) and 20.3623 (in millions of Naira), with a mean value of 16.8087 (in millions of Naira) and a standard deviation of 1.3958. Impliedly, auditors of the sampled firms, on average, charged ₦17 million audit fees, which range between ₦13 million and ₦20 million. In addition, the average score of the auditor’s industry specialisation (AI) in Table 2 is 0.9667, ranging from 0.0000 to 1.0000. This result suggests that, on average, 97% of the studied companies were audited by industry experts who have specialised knowledge of the sector. Given that the auditors are subject-matter experts in the business, this demonstrates that the financial statements of these companies could be adjudged legitimate, fair, and trustworthy. With respect to audit firm size, the Big4 audited twenty (20 firms) out of the chosen firms (or 68% of them), according to its mean value, while non-big4 audit firms audited the remaining 32% (10 companies). This testifies to the dominance of the Nigerian audit market by the big four firms [32]. On average, auditors of the selected companies were engaged for 4-year duration (mean = 0.3700). This is within the 5-year maximum stipulated in the N i g e r i a n c o d e o f corporate governance regarding the rotation of auditors [ 6 5 ] . Regarding the control variables, foreign affiliation (FA) with a mean of 0.5 implies that 50% of the selected firms are foreign affiliated, i.e., affiliated with companies outside Nigeria. The variable firm size (FSIZE) has an average value of 23.8168 million Naira, with the highest recorded value being 28.0179 million Naira. This result indicates that the largest firm in the population has approximately 28 million Naira of total assets, and on average, the firms in the population have approximately 24 million Naira of total assets based on the natural log of their total assets. 581 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate Furthermore, the mean leverage (LEV) value of 1.61 indicates a total debt-to-total equity ratio of 1.6 within the range of -22.4985 to 13.51190, respectively. This ratio means that an average company in the observation has more debt than equity in its capital structure. 4.2. Correlation Analysis The correlation results, as presented in Table 3, aim to show how closely related the outcome variable (REM) is to each predictor variable (audit quality measures). This is to reveal whether cases of multicollinearity exist among them. Table 3. Correlation matrix. REM 1.000000 AF 0.006806* 1.000000 AI -0.086709* -0.034835 1.000000 AS 0.126863 0.652460 0.151271 1.000000 AT -0.042491* -0.069564 -0.088462 -0.184711 1.000000 FA -0.134435 0.435179 -0.185695 0.342997 -0.103562 1.000000 FSIZE 0.016310 0.775166 -0.082738 0.501079 -0.053755 0.446527 1.000000 LEV 0.186333 0.140046 -0.096143 0.100583 -0.098634 0.121013 0.143314 1.000000 REM 1.000000 In general, it was shown that REM and the study's independent variables had both positive and negative associations, which are mostly negligible, while few others are significant at a 0.05 significance level. In Table 3, REM has a significantly negative relationship with auditor's industry specialisation (AI) and auditor’s tenure (AT). This implies that the more the financial statements of the companies in consideration are audited by a specialised auditor in the field and the longer time an auditor spends with the company, the less engagement in actual earnings management practice. Also, REM is significantly positive in association with audit fees (AF), implying that higher audit fee leads to more engagement in REM as it is likely for the auditor's independence to be influenced. Surprisingly, the insignificant positive link between audit firm size and real earnings manipulation suggests that companies using Big4 firms tend to manage earnings more. Regarding their respective values of 0.0163 and 0.1863, two control variables, leverage (LEV) and firm size (FS), show a positive correlation with real earnings manipulation. This positive relationship shows that large and highly leveraged firms are more prone to engage in REM. Furthermore, foreign affiliation (FA) is -0.1344, signifying a negative relationship with REM. By implication, the more a firm is affiliated with foreign bodies, the less likely it would indulge in earnings management. 4.3. Diagnostic Tests Measuring the degree of multicollinearity between the variables in question is one of the critical goals of performing a correlation matrix. It is necessary because linear regression assumes a case of no severe or significant multicollinearity between the variables, as this could impair the results and interpretations of the regression. 582 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate Table 4. Test for Multicollinearity. Variable Coefficient Variance Uncentered VIF Centered VIF Hausman Test C 3.472929 288.4767 NA AF 0.020584 486.3807 3.320074 AT 0.054676 1.680394 1.058648 AS 0.106282 6.003200 1.921024 AI 0.420474 33.76220 1.125407 LEV 0.002339 1.546373 1.042683 FSIZE 0.004928 234.8174 2.613984 FA Chi-Sq. Statistic Prob. (D.F.) 0.065356 2.714380 1.357190 5.110565 0.4025 (5) The model's multicollinearity findings are shown in Table 4. The centered VIF figures, which range between the values of 1 and 3, reveal that the degree of multicollinearity between the variables is not significant enough as they are less than the threshold of 10 [40, 67]. This result implies that the degree of multicollinearity may not lead to any problem in the regression analysis. Further, we conducted the Hausman test to evaluate whether the estimation of the panel regression model should be based on fixed effect or random effect after completing a standard pooled ordinary least squares regression. The criteria for decision-making (at 5% p-value) are to choose the fixed effect over the random effect if the 5% level is < p-value; otherwise, select the random effect. The results presented in Table 4 support using random effects to estimate our model (p = 0.4 > 0.05). Hence, the random effect is more appropriate in estimating the model. Table 5. Random Effect Regression Result In Table 5, the R-squared shows the change in the outcome variable, which the explanatory variables could describe. An R2 score of 0.026266 informs that the explanatory variables could explain 2.6% of the variance in the outcome variable. Furthermore, the model does not significantly affect the dependent variable, as denoted by the F-statistic value of 1.13 (p = 0.35 > 0.05). This result demonstrates, even more, the basis for the independent variables' partial justification of fluctuations in the dependent variable. Additionally, based on the general rule that the Durbin-Watson value should be < 2, our result of 1.5 demonstrates a lack of an auto-correlation issue during the period under investigation. Variable Coefficients Std. Error t-Statistics Prob.   C 4.979097 3.369688 1.477614 0.1406 AF -0.111941 0.181099 -0.618120 0.5370 AT 0.059692 0.137300 0.434760 0.6641 AS 0.616659 0.327369 1.883681 0.0606 AI -1.536436 1.807377 -0.850092 0.3960 LEV 0.047685 0.029724 1.604290 0.1097 FSIZE 0.015184 0.048881 0.310635 0.7563 FA -0.755596 0.687719 -1.098699 0.2728 R2 0.026266 Adjusted R2 0.002923 Std. E. of regression 1.036022 F-statistics 1.125234 Prob.(F-statistics) 0.347050 Durbin-Watson statistics 1.484914 583 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate 4.4. Discussion of Regression Results Based on the results in Table 5, the link between audit fees and REM is negative and statistically insignificant (p = 0.5370; negative coefficient of -0.1119). Thus, audit fees used for proxying audit quality do not affect REM practices in the sampled listed firms. This outcome contradicts the positive a- priori expectation and implies that irrespective of the audit fees charged, it does not result in any considerable change in actual earnings manipulation practice in the sampled Quoted firms in Nigeria. This result corroborates Almomani and Ayedh [39] study but is contrary to the conclusion arrived at by Bello and Ugoh [18] and Kwarbai and Osho [5] that audit fees positively and significantly influence earnings management. The outcome of our study further revealed that an auditor’s tenure is not significantly associated with real earnings management practice (p = 0.6641, and a positive coefficient value of 0.0597). Therefore, regardless of the duration an auditor spends auditing non-financial firms in Nigeria, it does not result in any significant change in real earnings manipulations. This result is contrary to the negative a-priori expectation formulated by the study. This result aligns with Soyemi, et al. [32]; Kurawa and Aca [34] and Tepalagul and Lin [52] but refutes the conclusion made by Ozcan [19] that an auditor's tenure exerts significant positive consequence on an REM. The diverse results between these studies could be explained by the different sectors and sample sizes used by each study. Although the big4 audit firms control the audit market in Nigeria, the engagement by a non- financial company of either a Big4 or a non-Big4 audit firm does not lead to any notable alteration in the practices of REM by such companies (p>0.05and a positive coefficient value of 0.6167). By implication, based on size, audit quality is similar between Big4 and non-Big4 firms in constraining actual earnings management practice in the listed non-financial firms in Nigeria. This assertion is contrary to the negative a-priori expectation of this study. At the same time, this outcome corresponds to previous studies [e.g. Soyemi, et al. [32] and Akintayo and Salman [68] but contradicts the conclusions drawn by Lopes [2]; Alao and Gbolagade [3] and Kurawa and Aca [34] who established a substantial and negative influence of the size of audit firm on the practice REM. Given that industry-expert auditors are equipped with the requisite technologies, personnel, and industry-related experience necessary for the quick discovery of misrepresentations and irregularities and the consequent reduction of the possibilities of firms engaging in REM Alao and Gbolagade [3] our study documents the negatively insignificant connection between real earnings management and auditor’s industry-specialisation (p > 0.5, and a negative coefficient value of -1.5364). This means that the engagement of industry-specialist auditors may not significantly change REM practices in listed non-financial firms in Nigeria. Our prior negative expectation is confirmed and supports the conclusions of Alao and Gbolagade [3] and Yasser and Soliman [42] but contradicts Bello and Ugoh [18] findings. For the control variables, both LEV and FSIZE exhibit non-significant positive associations with real earnings management (p > 0.5 and positive coefficient of 0.0477, 0.015184). This means that non- financial firms' gearing level and size exert no significant change in real earnings management practice. The third control variable, foreign affiliation (FA), has an insignificant negative relationship with REM (P > 0.5, and a negative coefficient of -0.7556). The outcome indicates that whether a business concern in the non-financial sector is affiliated with an external or an international body does not significantly determine if such a company would engage in earnings management practice. Generally, our results contradict the predominant view in previous literature [such as Kwarbai and Osho [5] and Bello and Ugoh [18]]. The possible reason for these diverse results could be due to the different approaches in our studies. While we used the three components of REM, like Bello and Ugoh [18] only the cash flow from the operation component was used by Kwarbai and Osho [5]. Also, while our study is multi-sectors, theirs is a mono sector (only consumer goods companies). Although our sample had nearly double the number of firms compared to the previous research, our firm-year observations extend beyond their maximum limit of 2019. 584 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate 5. Conclusions and Recommendations Consequent to the empirical results, we established that the proxies of audit quality exert insignificant effects on REM. Thus, the Big4- non-Big4 dichotomy, quantum of audit fees paid, length of auditor-client relationship and engagement of industry-specialised auditor would not prevent nor reveal significantly the occurrence of REM in the listed non-financial firm in Nigeria. Our findings showed that audit quality generally portends no significant declining consequence on real earnings management practice in listed non-financial firms in Nigeria. Therefore, audit firms should pay more attention to organisations' accrual earnings management approach as evidence of REM practices remains anecdotal. Stakeholders in Nigeria interested in listed non-financial organisations should consider the engagement of non-Big4 audit companies to narrow the dominance of Big4 since “size does not matter” in achieving financial reporting quality. Other factors could be considered, such as proper analysis or background checks of non-Big4 firms before audit engagements. Further, within the context of REM practices, the industry expertise of the audit firms should be de-emphasised in uncovering actual earnings management practices. At the same time, future researchers should focus on other sectors and control variables, such as compliance with corporate governance and company risk, while researching the link between earnings management practice and audit quality. Transparency: The authors confirm that the manuscript is an honest, accurate, and transparent account of the study; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. This study followed all ethical practices during writing. Copyright: © 2025 by the authors. This open-access article is distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). References [1] G. M. Tyokoso, M. H. Sabari, A. B. Dogarawa, and H. Ibrahim, "Effect of audit quality on earnings management of listed oil marketing companies in Nigeria," Tyokoso, GM, Sabari, MH, Dogarawa, AB & Ibrahim, H., Effect of Audit Quality on Earnings Management of Listed Oil Marketing Companies in Nigeria. Nigerian Journal of Accounting Research, A Publication of Department of Accounting, Ahmadu Bello University, Zaria, vol. 12, no. 1, pp. 65-96, 2016. [2] A. P. Lopes, "Audit quality and earnings management: Evidence from Portugal," Athens Journal of Business & Economics, vol. 4, no. 2, pp. 179-192, 2018. https://doi:10.30958/ajbe.4.2.4 [3] B. B. Alao and O. L. Gbolagade, "The influence of audit quality on earnings management among listed oil and gas companies in Nigeria," International Journal of Academic and Applied Research, ISSN, pp. 2643-9603, 2019. [4] O. A. Oyebamiji, "Audit quality and earnings management of selected listed consumer goods firms in Nigeria (2007- 2016)," Global Journal of Management and Business Research: D Accounting and Auditing, vol. 20, no. 2, 2020. [5] J. Kwarbai and F. Osho, "Audit quality and earnings management of listed manufacturing firms in Nigeria," Babcock Journal of Accounting and Finance, vol. 1, no. 1, pp. 1-26, 2021. [6] M. Cameran, A. Prencipe, and M. Trombetta, "Mandatory audit firm rotation and audit quality," European accounting review, vol. 25, no. 1, pp. 35-58, 2016. https://doi:10.1080/09638180.2014.921446 [7] J. Garcia‐Blandon, J. M. Argilés‐Bosch, and D. Ravenda, "Audit firm tenure and audit quality: A cross‐European study," Journal of International Financial Management & Accounting, vol. 31, no. 1, pp. 35-64, 2020. [8] P. Mohapatra, A. Dayanandan, and S. Kuntluru, "Audit partner rotation, and its impact on audit quality: Evidence from India," Cogent economics & finance, vol. 9, no. 1, p. 1938379, 2021. https://doi:10.1080/23322039.2021.1938379 [9] M. Oladejo, S. Yinus, and T. Sanni, "An appraisal of the roles of regulatory authorities on external audit quality in the Nigerian deposit money banks," KIU Interdisciplinary Journal of Humanities and Social Sciences, vol. 1, no. 2, pp. 211- 228, 2020. https://doi:10.59568/kijhus-2020-1-2-15 [10] S. Troy, "Enron scandal: The fall of a wall street darling," Retrieved: https://www.investopedia.com/updates/enron- scandal-summary/, 2021. [11] G. Corman et al., "General Electric company: selected applications of ceramics and composite materials," Materials research for manufacturing: An industrial perspective of turning materials into new products, pp. 59-91, 2016. [12] C. H. Kemmerer and T. J. Shawver, "Tyco: A top-down approach to ethical failure," Available at SSRN 1010558, 2007. https://creativecommons.org/licenses/by/4.0/ https://doi:10.30958/ajbe.4.2.4 https://doi:10.1080/09638180.2014.921446 https://doi:10.1080/23322039.2021.1938379 https://doi:10.59568/kijhus-2020-1-2-15 https://www.investopedia.com/updates/enron-scandal-summary/ https://www.investopedia.com/updates/enron-scandal-summary/ 585 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate [13] J. C. Coffee Jr, "Understanding Enron:" It's about the gatekeepers, stupid"," Bus. Law, vol. 57, p. 1403, 2001. [14] H. Bala and G. B. Kumai, "Audit committee characteristics and earnings quality of listed food and beverages firms in Nigeria," International Journal of Accounting, Auditing and Taxation, vol. 2, no. 8, pp. 216-227, 2015. [15] A. Madawaki and N. A. Amran, "Audit committee characteristics and financial reporting quality: Evidence from Nigerian listed companies," Terengganu International Finance and Economics Journal, vol. 3, no. 1, pp. 30-37, 2017. [16] I. Alhassan, I. A. Gololo, and K. A. Islam, "Audit committee and earnings management in quoted manufacturing firms in Nigeria," The Millennium University Journal, vol. 4, no. 1, pp. 45-55, 2019. [17] A. Abubakar, S. A. Mazadu, and A. M. Yusuf, "Audit quality and earning management of listed insurance companies in Nigeria," Gusau Journal of Accounting and Finance, vol. 1, no. 1, pp. 116-129, 2020. [18] M. B. Bello and T. T. Ugoh, "Effect of audit committee expertise on the relationship between audit quality and earnings management of consumer goods firms in Nigeria," Lafia Journal of Economics and Management Sciences, vol. 6, no. 1, pp. 32-46, 2021. [19] A. Ozcan, "Audit quality and earnings management: Evidence from Turkey," Uluslararası Iktisadi ve Idari incelemeler Dergisi, vol. 69, no. 1, pp. 67-78, 2019. https://doi:10.18092/ulikidince.464537 [20] G. Ceccobelli and A. Giosi, "Earnings management practices in the banking industry: The role of bank regulation and supervision," Corporate Governance: Search for the Advanced Practices, vol. 6, no. 1, pp. 193-214, 2019. https://doi:10.22495/cpr19p10 [21] A. Umoren, I. Ikpantan, and D. Ededeh, "Earnings management and financial performance of deposit money banks in Nigeria," Research Journal of Finance and Accounting, vol. 9, no. 22, pp. 94-100, 2018. [22] H. Saidu, O. Ibrahim, and J. Muktar, "The impact of earnings management on financial performance of listed deposit money banks in Nigeria," Journal of Accounting and Financial Management, vol. 3, no. 2, pp. 39-50, 2017. [23] H.-J. Olthof, "The effect of audit quality on earnings management: Evidence from the Netherlands," Master's thesis Submitted to Faculty of Behavioral, Management and Social Sciences, University of Twente, Netherlands, 2017. [24] D. C. Broadstock, X. Chen, C. A. Cheng, W. Huang, and Y. Ma, "Do corporate site visits constrain real earnings management?," Journal of Accounting, Auditing & Finance, vol. 39, no. 2, pp. 492-515, 2024. https://doi.org/10.1177/0148558X211067145 [25] X. S. Huang and L. Sun, "Managerial ability and real earnings management," Advances in Accounting, vol. 39, pp. 91- 104, 2017. [26] A. N. Chituru, S. A. Alice, O. T. Oluwatoyosi, and M. A. Grace, "Audit quality and earnings management by listed firms in Nigeria," Journal of Accounting, Finance and Auditing Studies, vol. 8, no. 4, pp. 278-305, 2022. https://doi:10.32602/jafas.2022.037 [27] D. A. Cohen and P. Zarowin, "Accrual-based and real earnings management activities around seasoned equity offerings," Journal of accounting and Economics, vol. 50, no. 1, pp. 2-19, 2010. [28] A. Y. Zang, "Evidence on the trade-off between real activities manipulation and accrual-based earnings management," The Accounting Review, vol. 87, no. 2, pp. 675-703, 2012. [29] S. Eriabie and E. Dabor, "Audit quality and earnings management in quoted Nigerian banks," Journal of Accounting, Finance and Auditing Studies, vol. 3, no. 1, pp. 1-16, 2017. [30] J. R. Francis, "What exactly do we mean by audit quality?," Accounting in Europe, vol. 21, no. 2, pp. 123-133, 2024. https://doi.org/10.1080/17449480.2023.2247410 [31] W. R. Knechel, "Audit quality and regulation," International Journal of Auditing, vol. 20, no. 3, pp. 215-223, 2016. https://doi:10.1111/ijau.12077 [32] K. A. Soyemi, O. A. Olufemi, and S. B. Adeyemi, "External audit (or) quality and accrual earnings management: Further evidence from Nigeria," Malaysian management journal, vol. 24, pp. 31-56, 2020. https://doi.org/10.32890/mmj.24.2020.10322 [33] L. Ahmad, E. Suhara, and Y. Ilyas, "The effect of audit quality on earning management within manufacturing companies listed on Indonesian stock exchange," Research journal of Finance and Accounting, vol. 7, no. 8, pp. 132-138, 2016. [34] J. M. Kurawa and A. I. Aca, "Audit quality and earnings management of listed non-financial companies in Nigeria," GSJ, vol. 8, no. 7, pp. 105-123, 2020. [35] L. Chu, H. Fogel-Yaari, and P. Zhang, "The estimated propensity to issue going concern audit reports and audit quality," Journal of Accounting, Auditing and Finance, vol. 39, no. 2, pp. 492-515, 2024. https://doi.org/10.1177/0148558X211067145 [36] D. Aobdia, "Do practitioner assessments agree with academic proxies for audit quality? Evidence from PCAOB and internal inspections," Journal of Accounting and Economics, vol. 67, no. 1, pp. 144-174, 2019. https://doi.org/10.1016/j.jacceco.2018.09.001 [37] T. B. Bell, M. Causholli, and W. R. Knechel, "Audit firm tenure, non‐audit services, and internal assessments of audit quality," Journal of Accounting Research, vol. 53, no. 3, pp. 461-509, 2015. https://doi.org/10.1111/1475-679X.12078 [38] L. M. Gaynor, A. S. Kelton, M. Mercer, and T. L. Yohn, "Understanding the relation between financial reporting quality and audit quality," AUDITING: A Journal of practice & Theory, vol. 35, no. 4, pp. 1-22, 2016. https://doi.org/10.2308/ajpt-51453 https://doi:10.18092/ulikidince.464537 https://doi:10.22495/cpr19p10 https://doi.org/10.1177/0148558X211067145 https://doi:10.32602/jafas.2022.037 https://doi.org/10.1080/17449480.2023.2247410 https://doi:10.1111/ijau.12077 https://doi.org/10.32890/mmj.24.2020.10322 https://doi.org/10.1177/0148558X211067145 https://doi.org/10.1016/j.jacceco.2018.09.001 https://doi.org/10.1111/1475-679X.12078 https://doi.org/10.2308/ajpt-51453 586 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate [39] T. M. Almomani and A. M. Ayedh, "The impact of audit quality on the earnings management: Evidence from manufacturing firms in Amman stock exchange," Journal of Management and Applied Science, vol. 3, no. 12, pp. 32–37, 2017. https://DOIONLINEIJMAS-IRAJ-DOIONLINE-10593 [40] G. Tyokoso and I. Tsebga, "Audit quality and earnings management of listed oil marketing companies in Nigeria," European Journal of Business and Management, vol. 7, no. 29, pp. 70-79, 2015. [41] M. E. Nawaiseh, "Impact of external audit quality on earnings management by banking firms: Evidence from Jordan," British Journal of Applied Science & Technology, vol. 12, no. 2, pp. 1-14, 2016. https://doi:10.9734/BJAST/2016/19796 [42] S. Yasser and M. Soliman, "The effect of audit quality on earnings management in developing countries: The case of Egypt," International Research Journal of Applied Finance, vol. 9, no. 4, pp. 216-231, 2018. [43] X. Ye, "Literature review on influencing factors of audit fees," Modern Economy, vol. 11, no. 02, p. 249, 2020. https://doi.org/10.4236/me.2020.112022 [44] PWC, "The audit fee for companies’ individual accounts," Retrieved: https://viewpoint.pwc.com/dt/uk/en/icaew/external_guidance/external_guidance__2_UK/IAEWExternal- guidance/icaew_technical_rele_UK/Tech-01-22-FRF---Disclosure-of auditor remuneration/Table-of- questions/The-audit-fee-for-companies--individualaccounts.html#pwctopic.dita_8176e5f6-22b7-45b9-b3ba- ce369e6ec6c7, 2022. [45] O. A. Abdul-Rahman, A. O. Benjamin, and O. H. Olayinka, "Effect of audit fees on audit quality: Evidence from cement manufacturing companies in Nigeria," European Journal of Accounting, Auditing and Finance Research, vol. 5, no. 1, pp. 6-17, 2017. [46] H. Affes and T. Smii, "The impact of the audit quality on that of the earnings management: Case study in Tunisia," Journal of Accounting & Marketing, vol. 5, no. 3, p. 1000178, 2016. https://doi:10.4172/2168-9601.1000178 [47] M. D. Aliyu, A. U. Musa, and P. Zachariah, "Impact of audit quality on earnings management of listed deposit money banks in Nigeria," Journal of Accounting and Financial Management, vol. 1, no. 8, pp. 31-46, 2015. [48] Y. Zhang, Y. Xiong, and Z. Zeng, "Abnormal audit fees and classified transfer of earnings management: Economic rent or audit cost," Auditing Research, vol. 2, pp. 82-90, 2019. [49] P. A. Martín-Cervantes and M. d. C. Valls Martínez, "Unraveling the relationship between betas and ESG scores through the Random Forests methodology," Risk Management, vol. 25, no. 3, pp. 899–934, 2023. [50] F. A. Gul, S. Y. K. Fung, and B. Jaggi, "Earnings quality: Some evidence on the role of auditor tenure and auditors’ industry expertise," Journal of accounting and Economics, vol. 47, no. 3, pp. 265-287, 2009. [51] N. Jadiyappa, L. E. Hickman, R. K. Kakani, and Q. Abidi, "Auditor tenure and audit quality: an investigation of moderating factors prior to the commencement of mandatory rotations in India," Managerial Auditing Journal, vol. 36, no. 5, pp. 724-743, 2021. [52] N. Tepalagul and L. Lin, "Auditor independence and audit quality: A literature review," Journal of Accounting, Auditing & Finance, vol. 30, no. 1, pp. 101-121, 2015. https://doi.org/10.1177/0148558X14544505 [53] T. T. G. Tran, T. T. Nguyen, B. T. N. Pham, and P. T. T. Tran, "Audit partner tenure and earnings management: Evidence from Vietnam," Journal of Financial Reporting and Accounting, vol. 23, no. 1, pp. 330-349, 2025. [54] Y. Almahrog, A. Marai, and G. Knežević, "Earnings management and its relations with corporate social responsibility," Facta Universitatis, Series: Economics and Organization, pp. 347-356, 2016. [55] E. A. Patrick, E. C. Paulinus, and A. N. Nympha, "The influence of corporate governance on earnings management practices: A study of some selected quoted companies in Nigeria," American Journal of Economics, Finance and Management, vol. 1, no. 5, pp. 482-493, 2015. [56] R. Havasi and R. Darabi, "The effect of auditor’s industry specialization on the quality of financial reporting of the listed companies in Tehran stock exchange," Asian Social Science, vol. 12, no. 8, pp. 92-103, 2016. https://doi:10.5539/ass.v12n8p92 [57] O. Jayeola, O. Agbatogun Taofeek, and A. Toluwalase, "Audit quality and earnings management among Nigerian listed deposit money banks," International Journal of Accounting Research, vol. 5, no. 2, pp. 1-5, 2017. https://doi:10.4172/2472-114X.1000159 [58] A. B. Uthman, A. A. Salami, and K. M. Ajape, "Impact of auditor industry specialization on the audit quality of listed non-financial firms in Nigeria," Nigerian Journal of Risk and Insurance, vol. 12, no. 1, pp. 29-56, 2022. [59] N. O. Ejoh, S. U. Oko, and D. S.-m. Akpanke, "Audit quality effects on earnings management of manufacturing firms in Nigeria: A comparative study of pre-and post-international financial reporting standard (IFRS) period," EPS, vol. 10, no. 24, pp. 30-41, 2019. https://doi:10.7176/RJFA/10-24-03 [60] J. R. Francis, "Going big, going small: A perspective on strategies for researching audit quality," The British Accounting Review, vol. 55, no. 2, p. 101167, 2023. https://doi.org/10.1016/j.bar.2022.101167 [61] B. M. Mitnick, "Origin of the theory of agency: An account by one of the theory's originators," Available at SSRN 1020378, 2019. https://doi.org/10.2139/ssrn.1020378 [62] B. M. Mitnick, "Agency theory," Wiley Encyclopedia of Management, pp. 1–6, 2015. [63] M. C. Jensen and W. H. Meckling, "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, vol. 3, no. 4, pp. 305-360, 1976. https://doi.org/10.1016/0304-405X(76)90026-X https://doionlineijmas-iraj-doionline-10593/ https://doi:10.9734/BJAST/2016/19796 https://doi.org/10.4236/me.2020.112022 https://viewpoint.pwc.com/dt/uk/en/icaew/external_guidance/external_guidance__2_UK/I https://viewpoint.pwc.com/dt/uk/en/icaew/external_guidance/external_guidance__2_UK/I https://viewpoint.pwc.com/dt/uk/en/icaew/external_guidance/external_guidance__2_UK/I https://viewpoint.pwc.com/dt/uk/en/icaew/external_guidance/external_guidance__2_UK/I https://doi:10.4172/2168-9601.1000178 https://doi.org/10.1177/0148558X14544505 https://doi:10.5539/ass.v12n8p92 https://doi:10.4172/2472-114X.1000159 https://doi:10.7176/RJFA/10-24-03 https://doi.org/10.1016/j.bar.2022.101167 https://doi.org/10.2139/ssrn.1020378 https://doi.org/10.1016/0304-405X(76)90026-X 587 Edelweiss Applied Science and Technology ISSN: 2576-8484 Vol. 9, No. 4: 574-587, 2025 DOI: 10.55214/25768484.v9i4.6030 © 2025 by the authors; licensee Learning Gate [64] S. Roychowdhury, "Earnings management through real activities manipulation," Journal of Accounting and Economics, vol. 42, no. 3, pp. 335-370, 2006. https://doi:10.1016/j.jacceco.2006.01.002 [65] Financial Reporting Council of Nigeria, "Nigerian code of corporate governance," Nigerian-Code-of-Corporate- Governance-2018-1, 2018. [66] B. N. Ashraf and N. Qian, "The impact of board internationalization on real earnings management: Evidence from China," Sage Open, vol. 11, no. 3, p. 21582440211032640, 2021. https://doi:10.1177/21582440211032640 [67] K. M. Marcoulides and T. Raykov, "Evaluation of variance inflation factors in regression models using latent variable modeling methods," Educational and Psychological Measurement, vol. 79, no. 5, pp. 874-882, 2019. https://doi:10.1177/0013164418817803 [68] J. S. Akintayo and R. T. Salman, "Effects of audit quality and corporate governance on earnings management of quoted deposit money banks in Nigeria," World Academy of Science, Engineering and Technology, International Journal of Economics and Management Engineering, vol. 12, no. 6, pp. 690-696, 2018. https://doi:10.1016/j.jacceco.2006.01.002 https://doi:10.1177/21582440211032640 https://doi:10.1177/0013164418817803