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Effect Of Audit Quality on Corporate Tax Avoidance of Listed Non-Financial Firms in Nigeria

Author

Listed:
  • Jaafaru Modibbo

    (Ahmadu Bello University, Zaria)

  • Prof. Hamisu Suleiman Kargi

    (Ahmadu Bello University, Zaria)

  • Dr. Ibrahim Yusuf

    (Ahmadu Bello University, Zaria)

  • Prof. Salisu Umar

    (Ahmadu Bello University, Zaria)

Abstract

This paper investigated the effect of audit quality on corporate tax avoidance of listed non-financial firms in Nigeria. A correlational research design was adopted using secondary data collected from annual reports and accounts of 56 listed non-financial firms in Nigeria for the period of ten (10) years (2014-2023). The data were analysed using descriptive statistics to provide summary statistics for the variables and correlation analysis to determine if there is a correlation between the dependent and explanatory variables of the study. Multiple regression was used to test the study hypotheses using STATA. The findings indicate that both audit tenure and auditor size are negatively and significantly associated with corporate tax avoidance, whereas audit fees exhibit a significant positive relationship with corporate tax avoidance. Based on the findings of the study recommends that the Financial Reporting Council of Nigeria (FRCN) and the Securities and Exchange Commission (SEC) should enforce mandatory auditor rotation rules by limiting auditor tenure to 5 to 7 years and also introduce a cooling-off period of 10 to 12 years before the same audit firm or its network members can be reappointed. Additionally, the Financial Reporting Council of Nigeria (FRCN) should enforce stringent rules concerning auditor independence. Audit committees should be required to evaluate the nature of non-audit services offered by the external auditor to prevent auditors from simultaneously auditing and designing tax avoidance schemes for their clients. The study also recommends that the management of listed non-financial firms should consider audit fees as a strategic investment rather than a cost to minimise. Higher audit fees can increase stakeholder trust, improve compliance, and lower the risk of regulatory penalties.

Suggested Citation

  • Jaafaru Modibbo & Prof. Hamisu Suleiman Kargi & Dr. Ibrahim Yusuf & Prof. Salisu Umar, 2025. "Effect Of Audit Quality on Corporate Tax Avoidance of Listed Non-Financial Firms 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 7452-7465, September.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-9:p:7452-7465
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    References listed on IDEAS

    as
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