Paper Title
Shareholders’ Representatives in the Audit Committee and Discretionary Accruals among Nigerian Stock Exchange Companies

Audit committee plays a vital role in the quality of financial reporting. Its effectiveness is affected by the characteristics of the committee. This paper examines whether participation of shareholders as members of the audit committee is effective in constraining earnings’ management practices. Data was collected from annual reports of 101 companies listed on the Nigerian Stock Exchange from 2011 to 2015. Generalized Method of Moment is used as the main statistical analysis in analyzing the relationship. Findings indicate that shareholder-members with financial expertise could significantly influence lower discretionary accruals. In addition, the results also show that shareholder-members provide effective leadership roles by chairing the audit committee which suppress the extent of discretionary accruals. However, the blockholder-members are found to have limited effect to discretionary accruals. This study is based on the requirement for Nigerian Stock Exchange for audit committee to be composed of shareholders. Future studies can explore a more detailed characteristics of the shareholders’ participation as members. Keywords - Accrual, Audit Committee, Earnings Management, Shareholders.