AUDIT QUALITY INDICATORS AND FINANCIAL PERFORMANCE OF SELECTED QUOTED MANUFACTURING FIRMS IN NIGERIA

Abstract

This study examines the impact of Audit Quality Indicators (AQIs) on the financial performance of selected quoted manufacturing firms in Nigeria over a five-year period: from 2019 to 2023. The research employs an ex post facto design and panel data analysis, focusing on 20 out of 41 listed manufacturing firms. The AQIs examined are: timing of audit execution; professional competence; audit tenure; and audit firm type. The findings reveal that these AQIs have minimal impact on the financial performance of the firms, as evidenced by their insignificance in affecting Return on Assets (ROA). Notably, the study shows that Big 4 audit firms do not have a significant advantage over non-Big 4 firms in terms of financial performance. Based on these results, the study recommends enhancing audit quality by selecting reputable audit firms, incorporating a broader range of performance indicators, and ensuring continuous professional development for auditors. It also suggests that government agencies should update regulatory frameworks and support research initiatives. Additionally, professional bodies should focus on improving standards, offering training, and funding research into advanced auditing techniques. Lastly, investors and the public are encouraged to demand greater transparency and high standards, fostering a culture of accountability that can improve both audit quality and financial performance.