Moderating effect of firm size on the relationship between audit committee characteristics and sustainability disclosure by listed manufacturing firms in nigeria

Abstract

This study examines the moderating effect of firm size on the relationship between audit committee characteristics and sustainability disclosure among listed manufacturing firms in Nigeria. A panel dataset covering five manufacturing firms listed on the Nigerian Exchange Group (NGX) over the period 2015 to 2024 was analysed using the panel least squares regression technique. The dependent variable was the environmental, social, and governance (ESG) disclosure score, while the independent variables comprised audit committee size, audit committee diligence, audit committee independence, and audit committee gender diversity. Firm size served as the moderating variable. The Hausman test confirmed the appropriateness of the random effects model (p = 0.4443). The findings reveal that all four audit committee characteristics exert a statistically significant positive effect on sustainability disclosures. Interaction terms between each audit committee attribute and firm size are likewise significant, indicating that firm size strengthens the positive influence of audit committee characteristics on sustainability reporting. The model explains approximately 59.77 per cent of the variation in sustainability disclosure (R2 = 0.5977, Adjusted R2 = 0.6755). These results underscore the importance of well constituted audit committees and suggest that larger firms derive greater governance benefits in the domain of sustainability reporting. Recommendations include expanding audit committee membership, enhancing meeting frequency, strengthening independence, promoting gender diversity, and investing in sustainability related training for committee members.