CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND FINDINGS

4.1. Introduction

The main objective of this study was to examine the Effect of Audit Committee Characteristics on the

performance of consumer goods firms in Nigeria. This chapter therefore presents data for subsequent

analysis using the research method explained in chapter three. Test of research hypotheses are performed

with the aim of providing evidence to answer the research questions earlier stated in chapter one of this

study. The findings of the study are also discussed in this chapter.

4.2. Data Presentation and Analysis

This section analyses the data presented in the previous section with the aid of statistical package for
social sciences (SPSS, version 20.0). The analysis of data i s presented in the subsequent sections:

4.2.1 Descriptive Statistics

The descriptive statistics for both the dependent and independent variables are presented in table 4.1 below:

Table 4.1 Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

Statistic Statistic Statistic Statistic Std. Error Statistic
PAT 24 3.30 3.30 3.3037 .00008 .00038
AF 24 3.53 5.88 4.5083 .16003 .78399
AM 24 30 .78 .4795 .04198 .20565
AI 24 30 .83 .5575 .38546 .17371
Valid N 24
(Listwise)

Table 4.1. Presents the descriptive statistics of all the variables. N represents the number of paired

observations and therefore the number of paired observations for the study is 24.

The Performance (PAT) reflects a minimum and maximum value of 3 .30 and 3 .31 respectively and has

a mean of 3.3037 with a deviation of 0.00038. The result also reveals that, Audit fee (AF) has minimum

and maximum values of 3.53 and 5.88 which also reflects a mean of 4.5083 with a deviation of 0.78399,

Audit meeting (AM) reflects a minimum and maximum value of 0.30 and 0.83 respectively and with a
mean of 0.4795 and a deviation of 0.20565. More so, the result further shows a minimum and maximum

value of 0.30 and 0.83 which also reflects a mean of 0.5575. "With a deviation of 0.17371 in respect to

Audit independence (AI). These deviations shown by all the variables both dependent (PAT) and

independent (AF, AM and AI) indicates the level at which these variables can increase or decrease.

The result of the descriptive statistics in line with the study's independent variables indicates that

consumer goods firms performance is enhanced more by Audit fee as a result of its high mean,

The reason for this could be due to the fact that when more remunerations are paid to an audit

team that will motivate them to carry out their function more effectively which in turn has an

effect on the performance of the firms.

Table 4.2 Correlations Matrix

Leverage Firm Size Institutional Ownership Return on Assets

Leverage Pearson Correlation 1 -.503** .170 .459**
Sig. (2-tailed) .000 .091 .000
N 100 100 100 100
** *
Firm Size Pearson Correlation -.503 1 .219 -.361**
Sig. (2-tailed) .000 .029 .000
N 100 100 100 100
*
Institutional Ownership Pearson Correlation .170 .219 1 -.029
Sig. (2-tailed) .091 .029 .772
N 100 100 100 100
Return on Assets Pearson Correlation .459** -.361** -.029 1
Sig. (2-tailed) .000 .000 .772
N 100 100 100 100
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).

Source: Research’s Computation Using SPSS Version, 23

Table 4.2 presents the Pearson correlation coefficients among four variables: Leverage, Firm Size,

Institutional Ownership, and Return on Assets. The table also indicates the significance levels for these

correlations, providing insights into the strength and direction of the relationships between the variables.

The correlation between Leverage and Firm Size is -0.503, which is statistically significant at the 0.01 level.
This negative correlation indicates that as firm size increases, leverage tends to decrease. Larger firms may

have more access to internal funds or equity financing, reducing their need to rely on debt. Smaller firms

might depend more on debt financing, leading to higher leverage.

The correlation between Leverage and Institutional Ownership is 0.170, which is not statistically significant

(p > 0.05). There is no strong evidence to suggest a relationship between leverage and institutional

ownership in this sample. Institutional ownership does not significantly impact the leverage decisions of

these firms. The correlation between Leverage and Return on Assets (ROA) is 0.459, which is statistically

significant at the 0.01 level. This positive correlation suggests that higher leverage is associated with higher

ROA. Firms with higher leverage may be using debt effectively to generate higher returns on their assets.

However, this relationship also highlights the risk-return trade-off, as higher leverage increases financial

risk.

The correlation between Firm Size and Institutional Ownership is 0.219, which is statistically significant at

the 0.05 level. This positive correlation indicates that larger firms tend to have higher institutional

ownership. Institutional investors might prefer larger firms due to their stability, market presence, and

perceived lower risk. Larger firms may also have more resources to attract and manage institutional

investments. The correlation between Firm Size and ROA is -0.361, which is statistically significant at the

0.01 level. This negative correlation suggests that as firm size increases, ROA tends to decrease. Larger

firms may face diminishing returns to scale or increased complexity and inefficiencies, leading to lower

ROA. Smaller firms might be more agile and efficient in asset utilization, resulting in higher ROA.

The correlation between Institutional Ownership and ROA is -0.029, which is not statistically significant (p

> 0.05). There is no significant relationship between institutional ownership and ROA in this sample.

Institutional ownership does not appear to directly influence the performance of these firms.
 4.2.2 Preliminary Test

Durbin-Watson statistic tests: The Durbin-Watson statistic in table 4.3 tests for autocorrelation in the

residuals of the regression analysis. Values close to 2 suggest no autocorrelation, values less than 1 or greater

than 3 indicate possible autocorrelation issues. A Durbin-Watson value of 0.892 suggests positive

autocorrelation in the residuals, which may indicate that the model's residuals are not independent.

Collinearity Statistics: Tolerance values in table 4.4 is close to 1 and VIF values below 10 suggest that

there is no significant multicollinearity among the independent variables. Multicollinearity is not a concern

in this model, indicating that the predictors do not unduly influence each other. The predictors in the model

are independent and do not have collinearity issues, ensuring the reliability of the regression coefficients.

4.2.3 Regression of the Estimated Model Summary

This section of the chapter presents the results produced by the model summaries for further analysis.

Table 4.3. Model Summary

Mode R R Adjusted R Std. Error of Chance Statistics Durbin-

l Square Square the Estimate R F DF Df Sig. F Watson

Square Change 1 2 Change

Change

1. 58Et .344 .246 .00033 344 3.495 3 20 0.35 1.583

a. Predicators: (Constant), AI, AM, AF

b. Dependent Variable PAT.

Table 4.3.1, presents the regression result between Audit Fee, Meeting, Independence and

Profit after tax. From the model summary table above, the following information can be distilled.
The R value of 0.586 shows that, there rs a positive and strong relationship between (AF, AM, AI) and

PAT. Also, the R2 stood at 0.344. The R2 otherwise known as the coefficient of determination shows the

percentage of the total variation. of the dependent variable (PAT) that can be explained by the

independent or explanatory variables (AF, AM and AI). Thus, the R2 value of 0.344 indicates that 34.4%

of the variation in the performance of listed firms can be explained by a variation in the independent

variables: (AF, AM and AI) while the remaining (65.6% (i.e. 100-R2) could be accounted by other

variables not included in this model.

The adjusted R2 of 0.246 indicates that if the entire population is considered for this study, this result

will, deviate from it by only 0.098 (i.e. 0.344 - 0.246 ). This result shows that there is a deviation of the

sample examined and the total population by 9.8%.

The table further shows the significant change of 0.35 with a variation of change at 34.4% indicate

that the set of independent variables were as a whole contributing to the variance in the dependent. The

results of the model summary revealed that, other factors other than Audit fee, Audit meeting and Audit

Independence can affect the performance of consumer goods Firms. According to Ephraim (2012) and

Anderson et al. (2004), these factors include Audit committee Size, Audit experience and Audit Tenure

which in one way or the other can affect the performance of firms as well.

4.2.4 Regression Results

Regression analysis is the main tool used for data analysis in this study. Regression analysis shows

how one variable relates with another. The result of the regression is hereby presented in this section.
Table 4.3.2. Coefficient Model

Unstandardized Standardized t Sig Collinearity Statistic

Coefficients Coefficients
B Std. Beta Tolerance NF
Error
(Constant) 3303 .001 6542.752 .000
AF .001 .000 1.258 3.158 .005 207 4.836
AM -.001 .001 -.465 -1.672 .110 .424 2356
AI -.003 .001 -1.496 -3.040 .006 .136 7.378
a. Dependent Variable: PAT

The regression result as presented in table 4.3.4 above to determine the relationship between AF, AM,

AI and PAT shows that when the independent variables are held stationary; the PAT variable is estimated

at 3.303. This simply implies that when all variables are held constant, there will be a significant

increase in the PAT of consumer goods firms up to the tune of 3.303 occasioned by factors not

incorporated in this study. Thus, a unit increase in AF will lead to a significant increase in PAT by

1.258. Similarly, a unit increase in. AM will lead to an insignificant decrease in PAT by 0.465 and a

unit increase in AI will lead to a significant decrease in PAT by 0.1.496.

4.3. Test of Research Hypotheses

The hypothesis formulated in chapter one will be tested in this section in line with the decision rule.

Accept the Null hypothesis if the calculated value is greater than the significant level of 0.05.

4.3.1. Test of Research Hypothesis O n e

Ho1: Audit committee size has no significant effect on the performance of Consumer goods firms in
Nigeria
Given that the significant level is 0.05 and the calculated value for Audit fee is 0.005 which is less than
the significant level , therefore the Null hypothesis is rejected and alternative accepted.
4.3.2. Test of Research Hypothesis Two
Ho 2: Audit committee composition has no significant effect on the performance of Consumer goods firms
in Nigeria
Given that the significant level is 0.05 and the calculated value for Audit meeting is 0.110 which is

greater than the significant level, therefore the Null hypothesis is accepted.

4.3.3. Test of Research Hypothesis Three

Ho3: Audit committee independence has no significant effect between audit committee meetings and
audit committee characteristics on the performance of Consumer goods firms in Nigeria.
Given that the significant level is 0.05 and the calculated value for A udit committee independence IS
0.006 which is less than the significant level, we therefore reject the Null hypothesis and accept the
alternative.
4.3.4. Test of Research Hypothesis Four
Ho3: Audit committee expertise and audit committee characteristics has no significant effect between
audit committee meetings and audit committee characteristics on the performance of Consumer goods
firms in Nigeria.
Given that the significant level is 0.05 and the calculated value for Audit committee expertise is 0.006
which is less than the significant level, we therefore reject the Null hypothesis and accept the alternative.

4.4. Discussion of findings

In line with the first objective of the study which was set to examine the effect of Audit committee

characteristics on the performance of consumer goods firms in Nigeria. A hypothesis was tested to

ascertain whether Audit characteristics have an effect on the performance of DMBs.

In line with the first specific objective which was to Examine the effect of Audit fee on the performance

of consumer goods firms in Nigeria, hypothesis was tested and the result reviewed that Audit fee have

a significant effect on the performance of consumer goods firms in Nigeria. This finding is in line

with that of Archambeault et al. (2008) they found out that there is a predicted positive relation between

short-term incentive compensation for audit committee members and likelihood of

restatement.

In order to ascertain the Ascertain the effect of Audit meeting frequency on the performance of consumer

goods firms in Nigeria. The second objective of the study was examined and findings was carried

out based on the hypothesis tested with which it was revealed that Audit meeting have no significant

effect on the performance of consumer goods firms in Nigeria and this findings contradicts with
the findings of Omorala (2012) who explored the relationship(s) that exists between audit

committee characteristics and firms' value using five audit committee characteristics variable and

five firm's value variables and found out that the two variables (i.e. Audit expertise and financial

performance) are more positively related on an overall efficiency basis than on an individual basis when

looked at from the performance angle while they are more related on an individual basis than collectively

when looked at from investors' angle. This can be interpreted to mean that all the variables of audit

committee effectiveness works together to improve firms' performance, the reason for this

contradiction could be the fact that both studies employed different methodologies.

The third objective which is to Evaluate the effect of Audit committee independence on

the performance of consumer goods firms in Nigeria was studied and a hypothesis formulated and

tested of which findings reviewed that Audit committee independence have a significant effect on the

performance of consumer goods firms in Nigeria. This is also in line with the findings of Sharma

et al. (2009) They find a positive association between the higher risk of financial misreporting

and audit committee size, institutional and managerial ownership, financial expertise and

independence of the board. Hence it is argued that the number of members on the audit committee

and number of meetings can potentially have a positive impact on firm performance.