AUDIT FIRM CHARACTERISTICS ON EARNINGS MANAGEMENT OF LISTED OIL AND GAS COMPANIES IN NIGERIA

Auditing is expected to serve as a monitoring role to reduce agency costs between managers and firms'" stakeholders. Auditors are supposed to act in shareholders" interests and assist financial statement users by verifying the validity of financial reporting, but this idea is not necessarily true in reality. Hence, this study examines the effect of audit firm characteristics on earnings management of listed oil and gas companies in Nigeria for the period 2019-2023. The study measured audit firm characteristics with auditor size, audit fee and audit tenure while earnings management was measured with modified Jones Model Discretionary accruals. The study adopts expo facto research design. The population of this study is made up of twelve (12) Oil and Gas Companies listed on the floor of the Nigerian Stock Exchange from year 2019 to 2023. Since the population is not too large, the study census all the 12 listed oil and gas companies listed on the Nigerian Stock Exchange as the sample size. The data used in this study are secondary data derived from annual reports of the 12 listed oil and gas companies. The study used panel regression. The random effect regression result revealed that auditor size and audit fee have no significant effect on earnings management, but auditor tenure has significant positive effect on earnings management of listed oil and gas companies in Nigeria. The study recommends that smaller audit firm should be patronized and encouraged as they are likely to carry out thorough audit assignment. Likewise, listed oil and gas companies should not pay more than five (5) percent of their net profit as audit fee as audit fee does not have influence on their earnings management. Lastly, the three years professional requirement for an auditor in Nigeria should be backed up by law and enforced. Keywords: Audit firm, earning management, firms" stakeholders, financial statement.