AUDIT FIRM CHARACTERISTICS AND FINANCIAL REPORTING QUALITY IN NIGERIAN BANKS
Abstract
This study examines the influence of key audit firm characteristics,
specifically tenure, size, and provision of non-audit services, on the
financial reporting quality of deposit money banks listed on the Nigerian
Exchange between 2016 and 2023. The research explores how these
characteristics influence financial reporting quality. Using an ex-post facto
design and panel regression analysis on data from twelve banks, the
findings reveal that audit firm size and non-audit services exert a
significant positive influence on financial reporting quality. Specifically,
larger audit firms are associated with higher transparency and reliability,
likely due to their institutional capacity and reputational incentives.
Additionally, when non-audit services are properly managed, they appear
to enhance auditors’ operational understanding without compromising
independence. Conversely, audit firm tenure showed no statistically
significant effect, suggesting that prolonged auditor-client relationships
do not inherently erode audit quality in the Nigerian banking sector. The
study contributes to the audit quality literature in emerging economies. It
offers policy implications for regulators, emphasizing the need to
strengthen oversight on auditor service mix and promote the use of
reputable, well-resourced audit firms to safeguard financial integrity.
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Published in UNIPORT JOURNAL OF BUSINESS, ACCOUNTING & FINANCE MANAGEMENT
ISSN: 1596-9911
This article appears in our peer-reviewed academic journal
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