AUDITORS ATTRIBUTE AND FINANCIAL PERFORMANCE OF LISTED FINANCIAL SERVICE FIRMS
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Abstract
This study investigates the impact of audit committee characteristics on the financial performance of listed companies in Nigeria, with a particular focus on audit fee, auditor independence, auditor rotation, auditor tenure, and auditor experience. The study was motivated by the growing demand for transparency and accountability in financial reporting within the Nigerian corporate sector. Secondary data covering ten listed financial and insurance companies from 2018 to 2022 were analyzed. The data were subjected to descriptive statistics, correlation analysis, diagnostic tests, and multiple regression analysis using EViews 13 and SPSS. The descriptive results revealed moderate variations in audit characteristics across firms. Correlation analysis indicated that audit fee and auditor experience have strong and significant positive associations with firm performance, while auditor rotation and tenure showed weak relationships. Auditor independence was found to be constant across firms and was therefore excluded from the regression analysis. Regression results demonstrated that audit fee (β =
0.001, p < 0.01) and auditor experience (β = 0.150, p < 0.05) significantly improve return on assets (ROA), while auditor rotation (p = 0.673) and auditor tenure (p = 0.645) were not significant predictors of performance. The model recorded an R² of 0.606, indicating that approximately 61% of variations in firm performance are explained by the audit committee characteristics examined. Diagnostic tests confirmed the absence of ulticollinearity,
heteroskedasticity, and autocorrelation, while residuals were normally distributed.
The findings suggest that higher audit fees and greater auditor experience enhance financial
performance, underscoring the importance of investing in quality audit processes and skilled
auditors. However, auditor rotation and tenure did not significantly affect performance, raising
questions about the effectiveness of these governance mechanisms in the Nigerian context. The
study concludes that strengthening audit committee practices, particularly by ensuring fair
compensation and leveraging auditor expertise, is critical for enhancing firm value and investor
confidence. It recommends that regulators and firms emphasize auditor competence and
independence while re-evaluating rotation and tenure policies for greater effectiveness.
0.001, p < 0.01) and auditor experience (β = 0.150, p < 0.05) significantly improve return on assets (ROA), while auditor rotation (p = 0.673) and auditor tenure (p = 0.645) were not significant predictors of performance. The model recorded an R² of 0.606, indicating that approximately 61% of variations in firm performance are explained by the audit committee characteristics examined. Diagnostic tests confirmed the absence of ulticollinearity,
heteroskedasticity, and autocorrelation, while residuals were normally distributed.
The findings suggest that higher audit fees and greater auditor experience enhance financial
performance, underscoring the importance of investing in quality audit processes and skilled
auditors. However, auditor rotation and tenure did not significantly affect performance, raising
questions about the effectiveness of these governance mechanisms in the Nigerian context. The
study concludes that strengthening audit committee practices, particularly by ensuring fair
compensation and leveraging auditor expertise, is critical for enhancing firm value and investor
confidence. It recommends that regulators and firms emphasize auditor competence and
independence while re-evaluating rotation and tenure policies for greater effectiveness.
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