EFFECT OF AUDIT QUALITY ON THE PROFITABILITY OF LISTED MANUFACTURING FIRMS IN NIGERIA
Abstract
ABSTRACT
This study examines the effect of audit quality on the profitability, measured by Return on Assets (ROA), of listed manufacturing firms in Nigeria. Drawing on Agency Theory and Stakeholder Theory, the research investigates the influence of audit fees, auditor independence, and audit committee size on ROA. An ex-post facto research design was employed, utilizing secondary panel data from 108 purposively selected firms listed on the Nigerian Exchange Group (NGX) over the period 2020 – 2024. Descriptive statistics and multiple regression analysis were used to analyze the data. The findings reveal a positive but insignificant relationship between audit fees and ROA, a positive and significant relationship between auditor independence and ROA, and a positive and significant impact of audit committee size on ROA. Control variables such as firm growth and age showed mixed effects. The results underscore the importance of enhancing auditor independence and engaging larger audit firms to improve financial performance. Recommendations include strengthening regulatory frameworks for auditor independence, optimizing audit fees, and ensuring effective audit committees. This study contributes to the literature on corporate governance in emerging markets and provides policy insights for regulators and manufacturing firms in Nigeria.
Full-Text Access Notice
In accordance with the NERD Policy on promoting peer-reviewed publication, public access to the full text of a project, thesis or dissertation is restricted for three years, allowing the author and supervisors sufficient time to pursue peer-reviewed publication.
During this period, researchers with legitimate academic or research purposes may request authorisation directly from the author to enable NERD to release the indexed full texts of the work using the form below.