IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v9y2025issue-9p2866-2875.html

Effects Of Audit Quality On Sustainability Reporting In Listed Pharmaceutical Companies In Nigeria

Author

Listed:
  • Olufemi Akinloye OYEDARE PhD

    (Department of Accounting and Finance, Ajayi Crowther University, Oyo, Nigeria)

  • Olaniyi Olowu AJEWOLE PhD

    (Department of Accounting and Finance, Ajayi Crowther University, Oyo, Nigeria)

Abstract

Sustainability reporting is central to corporate transparency, especially in pharmaceuticals, where environmental, social, and governance (ESG) performance faces growing scrutiny. While earlier studies explored its effect on financial performance, this study examines the influence of audit quality on sustainability reporting practices and stakeholder perceptions in Nigeria’s listed pharmaceutical sector—a gap in prior research. Focusing on auditor size, industry specialization, and audit tenure, the study evaluates their impact on disclosure quality and perceived credibility. Covering a five-year period (2019–2023), data were sourced from audited annual and sustainability reports of six listed pharmaceutical firms in Nigeria. Regression analysis shows that all three audit quality indicators significantly enhance sustainability disclosure quality: auditor size (β = 0.421, p = 0.001), industry specialization (β = 0.327, p = 0.003), and audit tenure (β = 0.298, p = 0.008), with the model explaining 68.2% of the variance (R² = 0.682). Composite audit quality also significantly influences stakeholder perceptions of report credibility (β = 0.563, p < 0.001), accounting for 74.3% of the variance (R² = 0.743). These findings confirm that higher audit quality improves both the content and credibility of sustainability reports. The study recommends engaging reputable auditors, ensuring adequate audit tenure, and prioritizing industry expertise to strengthen sustainability reporting integrity. This approach fosters stakeholder confidence and advances ESG accountability within the healthcare sector in emerging economies.

Suggested Citation

  • Olufemi Akinloye OYEDARE PhD & Olaniyi Olowu AJEWOLE PhD, 2025. "Effects Of Audit Quality On Sustainability Reporting In Listed Pharmaceutical Companies In Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(9), pages 2866-2875, September.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-9:p:2866-2875
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-9-issue-9/2866-2875.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/journals/ijriss/articles/effects-of-audit-quality-on-sustainability-reporting-in-listed-pharmaceutical-companies-in-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Adams, Carol A. & Abhayawansa, Subhash, 2022. "Connecting the COVID-19 pandemic, environmental, social and governance (ESG) investing and calls for ‘harmonisation’ of sustainability reporting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 82(C).
    2. 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.
    3. Ezekiel Oluwagbemiga Oyerogba & Femi Oladele & Peace Ebunlomo Kolawole & Mofoluwake Adedamola Adeyemo, 2024. "Corporate governance practices and sustainability reporting quality: evidence from the Nigerian listed financial institution," Cogent Business & Management, Taylor & Francis Journals, vol. 11(1), pages 2325111-232, December.
    4. Kelvin Lee Yong Ming & Yamunah Vaicondam & Amira Mas Ayu Amir Mustafa & Siti Nurul Munawwarah Roslan & Shen Yi & Komal Chopra & Pooja Khanna, 2024. "ESG Integration and Financial Performance: Evidence from Malaysia’s Leading Companies," International Journal of Energy Economics and Policy, Econjournals, vol. 14(5), pages 487-494, September.
    5. Manasseh Njagi, 2023. "Independence of Internal Auditors: Significance, Guidelines, and Influencing Factors," East African Finance Journal, East African Finance Journal, vol. 2(1).
    6. Ahmed Mahdi Sahi & Alaa Mahdi Sahi & Alhamzah F. Abbas & Saleh F. A. Khatib, 2022. "Financial reporting quality of financial institutions: Literature review," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2135210-213, December.
    7. DeFond, Mark & Zhang, Jieying, 2014. "A review of archival auditing research," Journal of Accounting and Economics, Elsevier, vol. 58(2), pages 275-326.
    8. Emmanuel Mensah & Christopher Boachie, 2023. "Analysis of the determinants of corporate governance quality: evidence from sub-Saharan Africa," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 20(4), pages 431-450, December.
    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. Nidal Neiroukh & Dilber Çağlar, 2025. "Unveiling the Nexus Between Audit Quality and Financial Performance: A Strategic Adaptation Approach Through Earnings Management and Corporate Governance," SAGE Open, , vol. 15(4), pages 21582440251, December.
    2. 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.
    3. 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.
    4. 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.
    5. Bagh, Tanveer & Hunjra, Ahmed Imran & Corbet, Shaen, 2025. "The impact of corporate governance on firm value: Understanding the role of strategic change," International Review of Economics & Finance, Elsevier, vol. 103(C).
    6. 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.
    7. 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.
    8. 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).
    9. 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).
    10. repec:mth:ijafr8:v:9:y:2019:i:1:p:450-461 is not listed on IDEAS
    11. Majeed, Rafaqat & Audi, Marc & Ali, Amjad, 2026. "Environmental, Social, and Governance Reporting and Financial Reporting Quality in Emerging Markets," MPRA Paper 129347, University Library of Munich, Germany.
    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. Rudra P. Pradhan & S. M. R. K. Samarakoon & Rana P. Maradana & Premjit Sahoo, 2025. "Climate change disclosure and firm value in a frontier market: Exploring the determinants," Natural Resources Forum, Blackwell Publishing, vol. 49(2), pages 1931-1964, May.
    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-9:p:2866-2875. 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.