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Auditors’ Independence, Audit Tenureship, Firm Characteristics And Audit Quality: Evidence From Nigeria

Author

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  • Ruth ODIN

    (Department of Accounting Benson Idahosa University, Nigeria)

  • David Jerry OZIEGBE

    (Department of Accounting Benson Idahosa University, Nigeria)

Abstract

This study aims to empirically examine the effect of auditors’ independence, audit tenureship, firm characteristics on audit quality in Nigeria. The population of the study comprises a sample of ten (10) listed pharmaceutical companies listed on the Nigerian Exchange Group (NGX). The time period for the study covers audited financial statements of the companies from 2013-2019. The study focused on two explanatory variables: auditors’ independence and audit tenure, and two control variables: firm size and firm age. While the dependent variable audit quality was proxied by big four firms and non-big four firms. The secondary source of data was adopted in this study. The data collected were analyzed using panel regression techniques. The results suggest that all the explanatory and control variables have a positive and significant effect on audit quality. The study recommends that auditors’ independence is directly proportional to audit quality, thus audit firms should be independent in order to enhance audit quality. Auditor-client engagement should not exceed 3 years to avoid familiarity threat. In addition, firms are advised to engage the services of one of the big audit firms since it results in improved audit quality. Younger firms should understudy older firms to learn from the experiences that they have acquired over the years that impact positively on audit quality

Suggested Citation

  • Ruth ODIN & David Jerry OZIEGBE, 2022. "Auditors’ Independence, Audit Tenureship, Firm Characteristics And Audit Quality: Evidence From Nigeria," European Journal of Accounting, Finance & Business, "Stefan cel Mare" University of Suceava, Romania - Faculty of Economics and Public Administration, West University of Timisoara, Romania - Faculty of Economics and Business Administration, vol. 10(3), pages 66-73, October.
    • Handle: RePEc:scm:ejafbu:v:10:y:2022:i:3:p:66-73
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    References listed on IDEAS

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    1. Segun Idowu Adeniyi & Ebipanipre Gabriel Mieseigha, 2013. "Audit Tenure: An Assessment of its Effects on Audit Quality in Nigeria," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(3), pages 275-283, July.
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