Earnings Management, Audit Quality And Dividend Policy Of Listed Firms In Ghana

Abstract

This study looked at the earnings management, audit quality, and dividend policy of Ghanaian listed companies. The agency theory, signalling theory, and lending credibility theory were adopted to explain the variables used in the study. The study drew on data from both financial and non-financial firms listed on the Ghana Stock Exchange. The study's data came from published financial statements from 2011 to 2020. Earnings management was measured using discretionary accrual (Modified Jones method). Audit quality was measured based on audit firm size and dividend policy was measured using dividend payout ratio. Using the GMM method of estimation, the study found that earnings management positively relates to dividend policy. However, audit quality has a negative relationship with dividend policy. It was also observed that audit quality moderates the relationship between earnings management and dividend policy. It is therefore recommended that regulatory bodies should formulate polices to guide the dividend policies of firms and help control earnings management. The study participant should look beyond dividend policy when assessing firms’ performance and also be informed in choosing auditors for their firms.