EFFECT OF AUDIT QUALITY ON FINANCIAL PERFORMANCE OF NIGERIAN DEPOSIT MONEY BANKS

Abstract

The increasing occurrence of audit failures globally has led to significant disappointment among investors and other stakeholders in corporate financial reporting. In Nigeria, the subpar financial performance of many corporations, particularly in the banking sector, has similarly been attributed to issues related to audit quality. This study seeks to investigate the impact of audit quality on the financial 
performance of deposit money banks in Nigeria. An ex-post facto research design was employed, as it is most appropriate for studies that explore causal relationships using historical data. While all the deposit money banks listed on Nigeria exchange Group as at January, 2022 were used as the population of the study, judgmental non-probability method of sample size determination was used. In view of this, thirteen (13) deposit money banks listed on the floor of Nigeria Exchange Group were selected. The  study focused on a sample of 13 listed deposit money banks in Nigeria, covering a five-year period from 2019 to 2023. Data analysis was conducted using descriptive statistics and SPSS version 21. The findings reveal that audit firm size has a positive and significant impact on the financial performance of the listed banks. Likewise, audit firm independence also shows a positive and significant influence on audit quality and, consequently, on financial performance. Conversely, audit tenure demonstrates a negative and statistically insignificant effect on audit quality and financial performance. In conclusion, the study establishes that audit quality significantly affects the financial performance of the sampled listed deposit money banks in Nigeria.