IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v9y2025issue-2p3105-3119.html

Revisiting Auditor Independence and Financial Performance: A Panel Data Study of Nigerian Banks

Author

Listed:
  • Martin Okokon Ufi

    (Sustainable Development Centre, University of Abuja, Abuja, Nigeria Centre for the Study of the Economies of Africa (CSEA), Abuja, Nigeria)

  • Uzochukwudinma Awele Otakpor

    (Sustainable Development Centre, University of Abuja, Abuja, Nigeria)

  • Omotayo Emmanuel Olanipekun

    (Sustainable Development Centre, University of Abuja, Abuja, Nigeria)

Abstract

This study examines the impact of auditor independence on the financial performance of listed deposit money banks in Nigeria, with financial performance measured by Return on Assets (ROA). Using a panel data approach, the study analyzes the annual reports of 12 Nigerian banks from 2013 to 2023. The results show that non-audit fees and auditor rotation have negative but statistically non-significant effects on ROA, indicating limited influence on performance. Conversely, audit concentration has a positive and statistically significant impact on ROA, suggesting that higher audit concentration, linked to larger audit firms, enhances performance by fostering investor confidence and regulatory compliance. Auditor tenure has a positive but non-significant effect, highlighting that auditor tenure does not substantially affect performance. The study emphasizes the importance of audit concentration in the Nigerian banking sector and recommends that regulators focus on ensuring competitive audit markets while strengthening policies around non-audit fees and rotation to maintain auditor independence. These findings offer valuable insights for governance practices in emerging markets and inform policymakers on improving financial transparency and stability.

Suggested Citation

  • Martin Okokon Ufi & Uzochukwudinma Awele Otakpor & Omotayo Emmanuel Olanipekun, 2025. "Revisiting Auditor Independence and Financial Performance: A Panel Data Study of Nigerian Banks," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(2), pages 3105-3119, February.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-2:p:3105-3119
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-9-issue-2/3105-3119.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/journals/ijriss/articles/revisiting-auditor-independence-and-financial-performance-a-panel-data-study-of-nigerian-banks/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Augustine O. Okolie, 2014. "Audit Quality and Earnings Response Coefficients of Quoted Companies in Nigeria," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 4(2), pages 1-10.
    2. Jean Ndagano, 2024. "Relationship between Auditor Independence and Financial Statement Quality in Rwanda," American Journal of Accounting, AJPO, vol. 6(3), pages 1-11.
    3. Quick, Reiner & Toledano, D. Sánchez & Toledano, J. S., 2023. "The Impact Of Auditor-Provided Non-Audit Services On Audit Quality: A Review Of The Archival Literature," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 137702, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    4. Alrashidi, Rasheed & Baboukardos, Diogenis & Arun, Thankom, 2021. "Audit fees, non-audit fees and access to finance: Evidence from India," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 43(C).
    5. Jensen, Michael C. & Meckling, William H., 2008. "Theory of the firm: managerial behavior, agency costs and ownership structure," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 48(2), April.
    6. Partha Mohapatra & Ajit Dayanandan & Sudershan Kuntluru & Athira A & David McMillan, 2021. "Audit partner rotation, and its impact on audit quality: Evidence from India," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1938379-193, January.
    7. Afsaneh Soroushyar, 2022. "Auditor characteristics and the financial reporting quality: the moderating role of the client business strategy," Asian Journal of Accounting Research, Emerald Group Publishing Limited, vol. 8(1), pages 27-40, July.
    8. DeFond, Mark & Zhang, Jieying, 2014. "A review of archival auditing research," Journal of Accounting and Economics, Elsevier, vol. 58(2), pages 275-326.
    9. Lin, Hsiao-Lun & Yen, Ai-Ru, 2022. "Auditor rotation, key audit matter disclosures, and financial reporting quality," Advances in accounting, Elsevier, vol. 57(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Florio, Cristina, 2024. "A structured literature review of empirical research on mandatory auditor rotation," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 55(C).
    2. Malik Abu Afifa & Fares Alsufy & Ahmad Abdallah, 2020. "Direct and Mediated Associations among Audit Quality, Earnings Quality, and Share Price: The Case of Jordan," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 500-516.
    3. Mary Kehinde Salawu, 2017. "Factors Influencing Auditor Independence among Listed Companies in Nigeria: Generalized Method of Moments (GMM) Approach," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(8), pages 191-203, August.
    4. Alastair Marais, 2024. "Audit Quality and Financial Statement Manipulation: The Moderating Effect of Tone at the Top," International Journal of Economics and Financial Issues, Econjournals, vol. 14(5), pages 220-232, September.
    5. Kausar, Asad & Shroff, Nemit & White, Hal, 2016. "Real effects of the audit choice," Journal of Accounting and Economics, Elsevier, vol. 62(1), pages 157-181.
    6. Zvi Singer & Jing Zhang, 2022. "Do companies try to conceal financial misstatements through auditor shopping?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(1-2), pages 140-180, January.
    7. Liwei Shan & Albert Tsang & Xiaoxue Zhang, 2024. "Transporting Audit Quality Across Countries: Returnee CEOs and Audit Fees," Journal of Business Ethics, Springer, vol. 192(4), pages 845-874, July.
    8. Musaib Ashraf & Aishwarrya Deore & Ranjani Krishnan, 2026. "The role of identity in corporate governance: evidence from gender differences in the audit committee chair-chief financial officer dyad," Review of Accounting Studies, Springer, vol. 31(1), pages 564-612, March.
    9. Bilokha, Alona & Kong, Joon Ho & Micale, Joseph A., 2024. "Universal demand laws and stakeholders: Evidence from the auditor's perspective," Advances in accounting, Elsevier, vol. 67(C).
    10. Kharuddin, Khairul Ayuni Mohd & Basioudis, Ilias G & Farooque, Omar Al, 2021. "Effects of the Big 4 national and city-level industry expertise on audit quality in the United Kingdom," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 43(C).
    11. repec:mth:ijafr8:v:9:y:2019:i:1:p:450-461 is not listed on IDEAS
    12. Ormazabal, Gaizka, 2018. "The Role of Stakeholders in Corporate Governance: A View from Accounting Research," CEPR Discussion Papers 12775, Centre for Economic Policy Research.
    13. Anna Alon & Oksana Kim, 2022. "Protectionism through legislative layering: Implications for auditors and investors," Journal of International Business Policy, Palgrave Macmillan, vol. 5(3), pages 363-383, September.
    14. Thi Giang Tan Tran & Quoc Thuan Pham & Thi Thu Phuong Tran & Thi Thao Hien Bui, 2025. "The Impact of Audit Firm Size on Audit Quality - An Empirical Study of The Vietnamese Stock Market," SAGE Open, , vol. 15(2), pages 21582440251, April.
    15. Patrick Velte, 2023. "The link between corporate governance and corporate financial misconduct. A review of archival studies and implications for future research," Management Review Quarterly, Springer, vol. 73(1), pages 353-411, February.
    16. Loan Nguyen T. K. & Dong Pham Xuan & Phuong Hoang Thi Lien, 2025. "CEO’s financial and accounting expertise on earning quality: The moderating role of audit quality," WSB Journal of Business and Finance, Sciendo, vol. 59(1), pages 81-92.
    17. Knechel, W. Robert & Thomas, Edward & Driskill, Matthew, 2020. "Understanding financial auditing from a service perspective," Accounting, Organizations and Society, Elsevier, vol. 81(C).
    18. Xinming Liu & Gerald J. Lobo & Hung‐Chao Yu, 2021. "Is Audit Committee Equity Compensation Related to Audit Fees?," Contemporary Accounting Research, John Wiley & Sons, vol. 38(1), pages 740-769, March.
    19. Santos-Jaén, José Manuel & Valls Martínez, María del Carmen & Martín de Almagro Vázquez, Gema & León-Gómez, Ana, 2025. "The impact of audit fees and auditor tenure on company valuation: An analysis of large U.S. audit firms," The North American Journal of Economics and Finance, Elsevier, vol. 79(C).
    20. Chen, Peter F. & He, Shaohua & Ma, Zhiming & Stice, Derrald, 2016. "The information role of audit opinions in debt contracting," Journal of Accounting and Economics, Elsevier, vol. 61(1), pages 121-144.
    21. Jeong-Bon Kim & Mikhail Pevzner & Xiangang Xin, 2019. "Foreign institutional ownership and auditor choice: Evidence from worldwide institutional ownership," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(1), pages 83-110, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:9:y:2025:issue-2:p:3105-3119. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.