among manufacturing firms listed in Kenya. The components of AC targeted included independence, gender diversity,

expertise, age and size. The study relied on agency, stewardship and stakeholder theories. The project was based on descriptive

design where all the nine manufacturing firms listed at the NSE were used in the study. The research adopted annual secondary

data extracted from annual reports of the manufacturing firms. The data covered the period from eight years from 2013 to 2020

75.31% of the total variation in earnings management. The study further revealed that AC Independence, gender diversity and

expertise had a significant inverse effect on EM. AC size had a direct and significant effect on EM. The effect of AC age

diversity on EM was direct and significant. The study concluded that AC composition had a critical role in minimising EM

among the firms studied.

Gender Diversity, Audit Committee Expertise, Audit Committee Size, Audit Committee Age Diversity.

Globally, in an effort towards improving board governance, sub-board committees are established and delegated with

various functions. A key subcommittee charged with ensuring the quality of books of accounts is the Audit Committee (Raimo,

between AC size and EM has tended to be positive in various studies (Isa & Farouk, 2018). AC composition is a collective

term that refers to AC independence, gender diversity, expertise, size and age (Moses, 2019). AC independence is the

condition that enables the committee to perform its duties objectively (Isa & Farouk, 2018). AC gender diversity is several

male or female directors within the committee as a proportion of the AC size (Chijoke-Mgbame, Boateng & Mgbame, 2020).

AC expertise is relevant auditing, accounting and financial technical skills possessed by the members of the AC (Zalata,

Tauringana & Tingbani, 2018). AC size is the enumeration of the directors serving in the AC. Finally, AC age diversity

represents the average age of the directors serving in the AC (Juhmani, 2017).

The composition of the AC determines its effectiveness (Juhmani, 2017). "It is paramount that the AC members be qualified

Various authorities have defined EM; however, there is no single definition of the concept that is generally adopted. El Diri

(2017) defined EM as a management discretion action to report financial statements that depict a picture of stable financial

performance. In a related definition, Kim, Kim and Zhou (2017) defined EM as conscious decisions taken by those preparing

financial statements and reports according to generally accepted accounting principles (GAAPs) to present an acceptable

financial performance to users of accounting information. In addition, Moratis and van Egmond (2018) define EM as the

manipulation of actual financial records by taking advantage of loopholes in the GAAPs. The minimization of EM is very

critical given that the executive in most cases makes decisions that are contrary to what shareholders would wish (Kjærland,

Haugdal, Søndergaard & Vågslid, 2020). Managers often take advantage of managerial discretion in earnings reporting

especially where controls are not adequate leading to EM. Such actions of EM lead to financial reports that are misleading the

users of accounting information (Harris, Karl & Lawrence, 2019). EM results from differing and contrasting interests of the

independence and EM has often been inverse in most studies (Abubakar, Usmam. Anuforo & Alhaji, 2021). Additionally, the

causal effect link between AC gender diversity and EM has been inverse in various studies (Sudarman & Hidayat, 2019).

Literature has also tended to establish an inverse causal effect link between AC experience and EM (Kapkiyai, Cheboi &

Komen, 2020). Finally, the causal effect link between EM and AC size has tended to be positive in various studies (Isa &

Farouk, 2018).

There are nine listed manufacturing and allied companies in Kenya including Carbacid Investments Ltd, East African

Breweries Ltd, Mumias Sugar, British American Tobacco Kenya, Flame Tree Group Holdings Ltd, Unga Group Ltd, B.O.C

Kenya Limited, Eveready East Africa Ltd and Kenya Orchards Ltd (NSE, 2020). The firms have ACs of varying composition

including independence, gender diversity, size, expertise and age diversity. In the list of the listed manufacturing companies,

Mumias Sugar halted most of its operations after a series of loss-making that could have been concealed by EM carried out

the contribution of AC chairs' legal expertise to Real EM in energy and utilities companies. The study revealed that AC chairs

with legal expertise was directly associated with Real EM practices. In the Netherlands, Mardessi and Fourati (2020) examined

the association between the quality of financial reporting and AC for companies with stock floated at the Amsterdam Stock

Exchange from 2010 to 2017. The study revealed that the possibility of the AC to lower real EM was based on AC gender

diversity. In Nigeria, Abubakar, Usman, Anuforo, and Alhaji (2021) evaluated the influence of AC attributes on EM. The

finding shows that AC size prevents managers' activities in earnings manipulations. In addition, AC financial expertise was

useful in curtailing earnings manipulation practices. Locally in Kenya, Kariuki and Aluoch (2020) evaluated the contribution

of AC size on the financial reporting quality in firms listed at the NSE. The study concluded that there was a direct impact of

effectiveness of audit committees and EM practices in listed firms at the Nairobi Securities Exchange (NSE). The study used a

conflict, the principal (shareholders) may take certain actions that involve putting in place control mechanisms. Such control

directors to serve on the board and monitor the work of the executive. The cost of contracting an external auditor to examine

books of accounts and ensure they are a true reflection of the financial status of the firm. Notwithstanding its strengths, agency

costs are an added cost in the operation of the firm hence eating into the profits of the shareholders (Wiseman,

Cuevas‐Rodríguez & Gomez‐Mejia, 2012). In addition, always acting in the best interest of the shareholders ignores other

stakeholders who have a stake in the firm like the government, employees, customers, competitors, suppliers and the public

(Bosse & Phillips, 2016). The adherence to shareholders' interests may also distort and interfere with other equally important

affairs like strategic focus, and investment plans hence minimising commitment to the creation of economic value (Eisenhardt,

1989). The theory is applicable in the study as it informs the variable AC composition and EM. To minimise the manager's

The theory proposed by Freeman (1984) posits that firms exist to meet the interests of those having an interest in the operations

and future of the organization and not just the shareholders. The attention of the theory is to those stakeholders that can hinder

or improve the chances of the business to survive and thrive in the business environment (Phillips et al., 2003). The stakeholder

theory also focuses on the responsibility of the executive to take care of the interests of all key stakeholders. Post, Preston and

Sachs (2002), stated that stakeholders are individuals groups or other organizations that have a direct interest in the operation

of the firm and are affected and can affect the operation, actions, goals and policies of the firm in question. Major stakeholders

may include creditors, owners, directors, employees, government, unions, suppliers and the local community where the firm

that it extends the boundary of agency theory from just focusing on shareholders to looking into other stakeholders' interests

too. The theory underpins corporate governance where the company is expected to balance the different divergent interests of

various stakeholders of the firm. The company is expected to operate under the dictates of the corporate governance principles

suggesting that a company should have directors serving in the AC to ensure that managers do not manipulate cooks of

accounts. This is done to ensure that financial reports are of high quality and present the fair and true economic status of the

firm such that different stakeholders can rely on them for various purposes and decisions.

2.2 Empirical Review

in Nigeria and hence may not be wholesomely adopted in Kenyan firms due to different operating environments.

expertise of AC and EM. The sample size consisted of three hundred and eighty-four observations for the period 2012- 2014.

aspects of AC composition on EM is therefore critical.

The research examined three hundred and ninety-three Indonesian organizations that had listed their common stock on the

and meeting frequency on EM contrary to theoretical expectations. Ghaleb, Al-Duais and Hashed (2021) analysed the causal

influence of AC independence on EM is necessary.

the effects the effect of other AC characteristics during and before global shocks.

no sampling was carried out with data covering the period of eight years from 2013-2020. Listed manufacturing firms were

collected included the number of members in the AC, the number of independent non-executive directors in the AC, the

from eight years from 2013 to 2020 and was recorded on data collection sheets.

may not be most appropriate if there is little variability of variables across time (Allison, 2009). If the P-value is greater than a

on EM, the study used an F-test where a p-value less than 5% level of significance signifies a significant effect. The p-values

inferential analysis. The findings are presented in Table 1.

number of experts in finance, accounting and auditing in its audit committee at 0.63%.

and Kurtosis is 3 then the data is perfectly normal. Further, the Shapiro-Wilk test was adopted to test the normality of the data

where non-normal data have a p-value less than a .05 level of significance. The finding revealed almost all variables depicted

producing acceptable estimates when the data being analyzed suffers from correlation issues. If the P-value is greater than a

more appropriate given the p-value was less than 0.05 level of significance.

scope of this study. Further, the p-value associated with F-test was less than 0.05 implying that the AC composition had a

diversity on EM was inverse and statistically significant (β2 = -1.27, t= 3.29, p= 0.005< 0.05). A one-unit increase in gender

diversity leads to a 1.27-unit decrease in EM. Having more female directors in the AC is associated with improved stewardship

based on AC gender diversity. The study also revealed that AC expertise had a significant inverse effect on EM (β3= -1.083, t=

not influence EM.

0.05). A one-unit increase in AC size was associated with an increase in EM by .1539. The direct effect implies that having a

0.5168, t= 3.78, p= 0.002<0.05). A one-unit increase in AC average age results in increased earnings management. The positive

AC have more independent non-executive directors to help encourage objective review of internal controls and financial

that listed manufacturing firms have well-constituted audit committees in terms of independence to minimise EM. Based on