External Monitoring Mechanism and Financial Reporting Quality Tunnelling from REM Perspective in Listed non-financial Firms Nigeria

Fraud cases and financial anomalies are becoming order of the day in Nigerian reporting setting and these signal flaws in auditing and internal control monitoring mechanisms from various segments of the economy. To restore audit client and other stakeholde r’s confidence and to provide enabling environment many strategies have been deployed by authorities to checkmate the daunting practice. This study used firm financial audit as a monitoring mechanisms utilizing audit pricing, audit tenure and auditor type to deter the debacle. A data was source from Thomson Reuters DataStream and firm financial reports from 2013-2021. The 2013-2014 were used for the lagging of variable as is germane prior to the deriving earnings management model. In the first phase, cross-sectional regression analysis of Roychowdhury (2006) models was performed using the 334 firm-year observations. In the second phase, the longitudinal panel data was analyzed using the two-step system Generalized Methods of Moments (GMM). Two key findings emerged from the data analyses. Firm External monitoring mechanism has dual effect in value addition and value reduction on the effectiveness of financial reporting quality in listed non-financial firms in Nigeria