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.
