IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v7y2023i12p107-118.html
   My bibliography  Save this article

The Effect of Audit Quality on The Financial Performance of Listed Deposit Money Banks in Nigeria

Author

Listed:
  • Adeyemo Kabiru Aderemi

    (Department of Management and Accounting, Lead City, University Ibadan, Oyo State, Nigeria.)

  • Akinleye Bilikis

    (Department of Management and Accounting, Lead City, University Ibadan, Oyo State, Nigeria.)

  • Omole Ilesanmi Isaac

    (Department of Management and Accounting, Lead City, University Ibadan, Oyo State, Nigeria.)

Abstract

This study explored the influence of audit quality on the financial performance of listed deposit money banks in Nigeria. It successfully identified a significant and positive relationship between audit quality, represented by audit fees and audit firm specialization, and the performance of the sampled banks measured using ROA (Return on Assets) and EPS (Earnings per Share). The research collected annual data from 2009 to 2021, sourced from the annual reports and accounts of non-financial quoted companies in Nigeria. To address potential endogeneity issues, the study employed feasible generalized least square regression, aligning with the results of diagnostic tests. The analysis outcomes indicated that audit fees had a positive and statistically significant impact on the return on assets and earnings per share of the sampled banks. Similarly, audit specialization exhibited a positive and significant influence on both return on assets and earnings per share. Consequently, the study confirmed a noteworthy positive relationship between audit quality and the performance of Nigerian listed Deposit Money Banks. In light of these findings, the study recommends that regulatory authorities in the sector encourage banks to engage specialized audit firms.

Suggested Citation

  • Adeyemo Kabiru Aderemi & Akinleye Bilikis & Omole Ilesanmi Isaac, 2023. "The Effect of Audit Quality on The Financial Performance of Listed Deposit Money Banks in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(12), pages 107-118, December.
  • Handle: RePEc:bcp:journl:v:7:y:2023:i:12:p:107-118
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-7-issue-12/107-118.pdf
    Download Restriction: no

    File URL: https://www.rsisinternational.org/journals/ijriss/articles/the-effect-of-audit-quality-on-the-financial-performance-of-listed-deposit-money-banks-in-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Qinghua Fu & Abdul Aziz Abdul Rahman & Hui Jiang & Jawad Abbas & Ubaldo Comite, 2022. "Sustainable Supply Chain and Business Performance: The Impact of Strategy, Network Design, Information Systems, and Organizational Structure," Sustainability, MDPI, vol. 14(3), pages 1-15, January.
    2. Pais, Cláudio & Dias, Cláudia Afecto, 2022. "The implications of book-tax conformity and tax change for the earnings management of Portuguese micro firms," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 46(C).
    3. J. Joseph Cronin, 2022. "Correction to: Marketing’s new myopia: Expanding the social responsibilities of marketing managers," AMS Review, Springer;Academy of Marketing Science, vol. 12(3), pages 253-253, December.
    4. Nhat Tan Nguyen & Meenakshi Yadav & Sagar Pande & Astha Bhanot & Mohammed Faez Hasan, 2022. "Impact of diversity management on organizational performance in hotel organizations: a conceptual framework," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(1), pages 186-196, March.
    5. J. Joseph Cronin, 2022. "Marketing’s new myopia: Expanding the social responsibilities of marketing managers," AMS Review, Springer;Academy of Marketing Science, vol. 12(1), pages 30-37, June.
    6. Muhammad Azeem Naz & Rizwan Ali & Ramiz Ur Rehman & Collins G. Ntim, 2022. "Corporate governance, working capital management, and firm performance: Some new insights from agency theory," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1448-1461, July.
    7. Omaliko Emeka & Mordi Kelvin A, 2023. "Effect of bankruptcy risk on value of conglomerate firms in Nigeria," International Journal of Economics, Business and Management Studies, Online Science Publishing, vol. 10(1), pages 10-19.
    8. Matthew R. Marvel & Marcus T. Wolfe & Donald F. Kuratko & Greg Fisher, 2022. "Examining entrepreneurial experience in relation to pre-launch and post-launch learning activities affecting venture performance," Journal of Small Business Management, Taylor & Francis Journals, vol. 60(4), pages 759-785, July.
    9. Yulianti Abbas, 2023. "Future directions for research in governmental accounting, auditing, and financial reporting," Chapters, in: Komla Dzigbede & W. B. Hildreth (ed.), Research Handbook on Public Financial Management, chapter 6, pages 95-115, Edward Elgar Publishing.
    10. Mahdi Salehi & Mohammed Ibrahim Jebur & Saleh Orfizadeh & Ali Mohammed Abbas Aljahnabi, 2022. "The Relationship between Audit Adjustments and Audit Quality in Iraq," JRFM, MDPI, vol. 15(8), pages 1-17, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stefanie Wannow & Martin Haupt & Martin Ohlwein, 2024. "Is brand activism an emotional affair? The role of moral emotions in consumer responses to brand activism," Journal of Brand Management, Palgrave Macmillan, vol. 31(2), pages 168-192, March.
    2. Jianwen Zhang & Jacob Cherian & Yawar Abbas Sandhu & Jawad Abbas & Laura Mariana Cismas & Constantin Viorel Negrut & Lucia Negrut, 2022. "Presumption of Green Electronic Appliances Purchase Intention: The Mediating Role of Personal Moral Norms," Sustainability, MDPI, vol. 14(8), pages 1-15, April.
    3. O. C. Ferrell, 2022. "Perspectives on socially responsible marketing: the chasm widens," AMS Review, Springer;Academy of Marketing Science, vol. 12(1), pages 1-6, June.
    4. Gupta, Deepika & Pandey, Asheesh, 2024. "Analyzing impact of corporate governance index on working capital management through fractal functions," Chaos, Solitons & Fractals, Elsevier, vol. 183(C).
    5. Guilian Wang & Liyan Zhang & Jing Guo, 2022. "Driving Factors and Mechanisms of AMT Application Levels for Equipment Manufacturing Enterprises: Based on Programmatic Grounded Theory," Sustainability, MDPI, vol. 14(14), pages 1-18, July.
    6. Kuratko, Donald F. & Devin Burnell, & Stevenson, Regan & Neubert, Emily & Fisher, Greg, 2023. "Enacting entrepreneurial hustle," Business Horizons, Elsevier, vol. 66(2), pages 237-249.
    7. Ali Shariff Kabara & Saleh F. A. Khatib & Ayman Hassan Bazhair & Hamid Ghazi H Sulimany, 2022. "The Effect of the Board’s Educational and Gender Diversity on the Firms’ Performance: Evidence from Non-Financial Firms in Developing Country," Sustainability, MDPI, vol. 14(17), pages 1-15, September.
    8. Kalpina Kumari & Jawad Abbas & Jinsoo Hwang & Lucian Ionel Cioca, 2022. "Does Servant Leadership Promote Emotional Intelligence and Organizational Citizenship Behavior among Employees? A Structural Analysis," Sustainability, MDPI, vol. 14(9), pages 1-18, April.
    9. García-Cáceres, Rafael Guillermo & Torres-Valdivieso, Sergio & del Razo-Hernandez, Adolfo, 2024. "Governance forms of the pharmaceutical supply chain of Bogota, Colombia," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).
    10. Mengli Fan & Yi Huang & Wei Xing, 2022. "Information Acquisition for Product Design in a Green Supply Chain," Mathematics, MDPI, vol. 10(7), pages 1-16, April.
    11. Jiang, Haiyun & Xu, Shulin & Cui, Jingwen & Subhani, Ghulam, 2023. "The impact of bank capital, liquidity and funding liquidity on sustainable bank lending: Evidence from MENA region," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 713-726.
    12. Khowanas Saeed Qader & Kemal Cek, 2023. "Analysis of the Impact of External Auditors’ Autonomy on Financial Accounting Information Quality Case Study Commercial Banks in Northern Iraq," Sustainability, MDPI, vol. 15(12), pages 1-21, June.
    13. Zhikang Xie & Xinglin Liu & Hina Najam & Qinghua Fu & Jawad Abbas & Ubaldo Comite & Laura Mariana Cismas & Andra Miculescu, 2022. "Achieving Financial Sustainability through Revenue Diversification: A Green Pathway for Financial Institutions in Asia," Sustainability, MDPI, vol. 14(6), pages 1-16, March.
    14. Xiao Hu & Shumaila Mazhar Khan & Shijiao Huang & Jawad Abbas & Mirabela Constanta Matei & Daniel Badulescu, 2022. "Employees’ Green Enterprise Motivation and Green Creative Process Engagement and Their Impact on Green Creative Performance," IJERPH, MDPI, vol. 19(10), pages 1-13, May.
    15. Kuckertz, Andreas & Bulut, Cagri & Brändle, Leif, 2024. "Unobserved heterogeneity in firm performance: The alignment of entrepreneurial orientation and organizational error management culture," Journal of Business Research, Elsevier, vol. 179(C).
    16. Xiaofei Yan & Juan Felipe Espinosa-Cristia & Kalpina Kumari & Lucian Ionel Cioca, 2022. "Relationship between Corporate Social Responsibility, Organizational Trust, and Corporate Reputation for Sustainable Performance," Sustainability, MDPI, vol. 14(14), pages 1-15, July.
    17. Han-Khanh Nguyen, 2022. "A 3-Dimensional Frame of Reference for Prevention of Risk in Supply Chain," JRFM, MDPI, vol. 15(3), pages 1-22, March.
    18. Tobar Arias, José E. & Mora Valencia, Andrés & Benavides Franco, Julián, 2023. "Earnings management to avoid losses: Evidence in non-listed Colombian companies," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 53(C).
    19. Zhong, Ziqi & Zhao, Elena Yifei, 2024. "Collaborative driving mode of sustainable marketing and supply chain management supported by metaverse technology," LSE Research Online Documents on Economics 121160, London School of Economics and Political Science, LSE Library.
    20. John F. Gaski, 2023. "Replies to comments on “Toward social responsibility,” also incorporating a focus on ESG," AMS Review, Springer;Academy of Marketing Science, vol. 13(1), pages 5-11, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:7:y:2023:i:12:p:107-118. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.