IMPACT OF AUDIT FIRM CHARACTERISTICS ON THE QUALITY OF FINANCIAL REPORT OF LISTED CONSTRUCTION FIRM IN NIGERIA

ABSTRACT This study investigated the impact of audit firm characteristics—specifically independence, size, and tenure—on the quality of financial reports of listed construction firms in Nigeria. The construction industry is crucial for economic development, and the reliability of financial reporting is essential for stakeholders, including investors and regulators. The research employs a quantitative approach, utilizing data collected from financial statements and audit reports of selected firms. The findings reveal that while audit firm independence does not significantly influence financial reporting quality, there exists a notable negative correlation between audit firm size and accrual quality. This suggests that larger audit firms may compromise the thoroughness of their audits, impacting the reliability of financial statements. Furthermore, the study finds no significant relationship between audit tenure and financial report quality, indicating that the length of the auditor-client relationship does not inherently enhance the quality of financial reporting. These findings highlight the complexities surrounding audit practices in the construction sector, emphasizing the need for a multifaceted approach to improving financial reporting quality. The research contributes to the existing literature by providing empirical evidence on the interplay between audit firm characteristics and financial reporting quality in a developing economy, ultimately offering insights for stakeholders to enhance transparency and accountability in the construction industry. The study concludes with recommendations for regulatory bodies to enforce stricter oversight mechanisms and for construction firms to prioritize the selection of audit firms based on their track record of delivering quality audits. By fostering an environment that promotes high-quality audits, the construction sector in Nigeria can improve the reliability of financial reporting, thereby enhancing stakeholder trust and facilitating sustainable growth.