INTERNATIONAL JOURNAL OF ACCOUNTING, FINANCE AND TAXATION

INFLUENCE OF EXTERNAL AUDIT INDEPENDENCE ON THE PROFITABILITY OF LISTED MANUFACTURING FIRMS IN NIGERIA

Oladejo M.O, Ojo O. C, Badmus I.O

June 23, 2026

Citation

INTERNATIONAL JOURNAL OF ACCOUNTING, FINANCE AND TAXATION , Vol. 3 (2) (2026) , pp. 1-13

Details

ISSN: 3027-0378
Published: June 23, 2026
Status: Published

Abstract

External audit has become a fundamental area of audit research in recent times especially after the classical cases of audit failure experiences in major corporations. Audit of manufacturing firms have proven to be among the most worrisome for professional accountants because of the inadequacy of the internal controls as argued. This study examined external audit independence and its impact on the profitability of listed manufacturing firms in Nigeria in Nigeria. Ex-post facto research design was employed for this study. The population of the study consists of thirty-four (34) listed manufacturing firms registered and quoted on the floor of the Nigerian Exchange Group (NGX) as at December, 2024. A purposive sampling technic was adopted to select ten (10) firms on the Nigerian Exchange Group archives for the period of 2005-2024. Inferential statistics such as panel regression analysis was used to analyse the collected data. Findings from the result of panel regression on the effects of external audit independence on the profitability selected manufacturing firms in Nigeria showed that two (2) out of the four (4) explanatory variables were significant in explaining the variation of profitability. These variables are eternal audit independence (0.0139) and regulatory oversight (0.0219). The study revealed that there is significant relationship between external audit independence and the profitability of listed manufacturing firms in Nigeria. It is therefore recommended that manufacturing firms should prioritize maintaining the independence of their external auditors. This can be achieved by implementing strict internal policies that limit the influence of management on audit processes.

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