THE EFFECT OF AUDIT TENURE ON FINANCIAL REPORTING QUALITY
Faculty
Department
Year of Publication
upload
Publication Type
Abstract
The general objective of this study is to the effect of audit firms’ tenure on the financial reporting quality of firms operating in Nigeria. Specifically, this study investigated the impact of short-term audit tenure, long-term audit tenure, audit partner rotation, audit firm rotation and audit fees on the financial reporting quality of firms operating in Nigeria.
The study used panel data considering the 10 largest companies from all the sectors on the Nigeria Exchange Group covering the period 2020 to 2024 for the analysis, the data was sourced fromannual report of the firms considered. Various statistical and econometric tool were applied to analyze the data and this include preliminary tests and descriptive statistics, autocorrelation Test, heteroskedasticity Test, normality test, correlation analysis and panel data analysis. The results revealed that audit partner rotation and audit fees have statistically significant influence on the financial reporting quality. While short-term tenure, long-term tenure and audit firm tenure have a statistically insignificant influence on financial reporting quality.
Based on the findings, the study recommended that regulators and firms should not overly emphasize limiting auditor engagements to short period, firms should strike a balance between auditor familiarity and independence and firms and regulators continue to enforce periodic rotation of audit partners.
The study used panel data considering the 10 largest companies from all the sectors on the Nigeria Exchange Group covering the period 2020 to 2024 for the analysis, the data was sourced fromannual report of the firms considered. Various statistical and econometric tool were applied to analyze the data and this include preliminary tests and descriptive statistics, autocorrelation Test, heteroskedasticity Test, normality test, correlation analysis and panel data analysis. The results revealed that audit partner rotation and audit fees have statistically significant influence on the financial reporting quality. While short-term tenure, long-term tenure and audit firm tenure have a statistically insignificant influence on financial reporting quality.
Based on the findings, the study recommended that regulators and firms should not overly emphasize limiting auditor engagements to short period, firms should strike a balance between auditor familiarity and independence and firms and regulators continue to enforce periodic rotation of audit partners.
Supervisor(s)
co-supervisor