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| Effect of Audit Quality on Financial Performance of Deposit Money Banks in Nigeria
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Onyejepu Melie Ifeanyichukwu and Orjinta, Hope Ifeoma (Ph.D)
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Abstract:
This study investigated the effect audit quality on financial performance of selected deposit money banks in Nigeria for a period of ten (10) years spanning from 2013 to 2022. Ex-post facto and longitudinal research design was adopted. Financial performance was used as dependent variable captured using Tobin's q while audit fee, audit firm size, audit tenure and auditor academic qualification were used as independent variables. Population of the study consist of seventeen (17) Deposit Money Banks from which a sample of 12 quoted Deposit Money Banks from Nigeria Exchange Group was selected for the period of ten years spanning 2013 to 2022. The secondary sources of data were collected from annual reports of the selected banks quoted in Nigeria Exchange limited and four (4) specific objectives and hypotheses were subjected to some preliminary data tests like descriptive statistics, Pearson correlation analysis and Variance inflation factor. The formulated hypotheses were tested and analyzed using panel regression analysis for further decision making. Using a sample of 120 firm-year observations, the result revealed that audit quality components such as auditor academic qualification has positive and significant effect on financial performance of Deposit money banks in Nigeria which was statistically significant at 5% level of significance while audit fee has negative but significant effect on financial performance of Deposit money banks in Nigeria which was statistically significant at 5% level of significance. Again, audit tenure and audit firm size have positive but non-significant effect on financial performance of quoted Deposit money banks in Nigeria. The study recommends among others that auditors should be encouraged to obtain additional qualifications as it aids them in providing high quality audit services that is capable of improving financial performance while regulatory agencies in Nigeria should increase surveillance on audit practices with regards to fees charged to improve financial performance of banks in Nigeria.
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