Effect of Audit Quality on Financial Performance of Quoted Conglomerates in Nigeria

Abstract

This study was embarked on to ascertain the effect of audit quality on financial performance of quoted conglomerates in Nigeria. The study specifically investigates the effect of audit size, fee and tenure on return on asset of selected conglomerates in Nigeria. Purposive sampling technique was used to select the conglomerates in the study. The study involves a time series data between 2011-2021 involving 12 years. Data was excerpted from their financial summaries. The study adopted Ordinary least square regression technique, and also applied econometric estimations such as Augmented Dickey Fuller (ADF) and Johanson Cointegration tests. The study therefore concludes that audit tenure affects a propensity to disclose key audit matters. However, audit size and fee are not strong drivers of financial performance. The Study recommends that organisations should ensure credibility and transparency in audit; this will enhance the quality of audit report. There must be willingness of management to communicate with the auditor while also enlarging the audit size to improve audit reports and minimize the adverse impact on the company, the management should make the auditor more aware of the intended disclosure and the company’s position and communicate with the auditor more actively.