AUDIT QUALITY AND FIRM PERFORMANCE IN LISTED COMPANIES IN NIGERIA

ABSTRACT

This study aims to examine the effects of audit quality on the performance in listed companies in Nigeria. The research focuses on a population of 177 listed companies in Nigeria, with a sample of 10 companies selected through the purposive sampling method over an eight year period spanning from 2015-2023. Utilising the Fully Modified Ordinary Least Square Econometric Technique. The study collects secondary data from the annual reports of the selected companies. Panel Data analysis is employed as the primary statistical method, complimented by descriptive statistics and correlation matrices to analyse the data. The findings indicate that Auditor Independence has a significant negative effect on the ROA which is a parameter of firms’ performance, auditor rotation and audit tenure are also seen to have no significant effect on firms performance. Recommendations include balancing auditor independence requirements, regulators should strike a balance between enforcing auditor independence and recognising its potential impact on firm profitability. Other recommendations involve reevaluating auditor rotation policies, promote long term audit client relationships, enhance auditor accountability and oversight and encourage comprehensive audit quality metrics. Further research should cover a longer period, include a larger sample size and explore additional variable to provide a more comprehensive understanding of the effect of audit quality on firms’ performance.