Volume 3, Issue 5, October 2014, Page: 187-195
Audit Firm Characteristics and Audit Quality in Nigeria
Ilaboya Ofuan James, Department of Accounting, Faculty of Management Sciences, University of Benin, Benin City, Nigeria
Ohiokha Friday Izien, Department of Accounting, Auchi Polytechnic, Auchi, Edo State, Nigeria
Received: Oct. 22, 2014;       Accepted: Oct. 29, 2014;       Published: Oct. 30, 2014
DOI: 10.11648/j.ijber.20140305.14      View  3634      Downloads  459
Abstract
This study examines the impact of audit firms’ characteristics on audit quality. We proxy the dependent variable (audit quality) using the usual dichotomous variable of 1 if big 4 audit firm and 0 if otherwise. Data for the study were sourced from the financial statements of 18 food and beverage companies listed on the Nigerian Stock Exchange market within the period studied (2007-2012). The multivariate regression technique with emphasis on Logit and Probit method was used to estimate our model for the study. The choice of this approach was basically influenced by the dichotomous nature of our dependent variable and the fact that our data is both time series and cross-sectional. The findings indicate that there is a positive relationship between firm size, board independence and audit quality whereas there is a negative relationship between auditor’s independence, audit firm size, audit tenure and audit quality. The study suggests the need for the Nigerian Financial Reporting Council and other regulatory bodies in line with best practices to look critically into the three years professional requirements for auditors.
Keywords
Audit Quality, Audit Tenure, Audit Independence, Board Independence
To cite this article
Ilaboya Ofuan James, Ohiokha Friday Izien, Audit Firm Characteristics and Audit Quality in Nigeria, International Journal of Business and Economics Research. Vol. 3, No. 5, 2014, pp. 187-195. doi: 10.11648/j.ijber.20140305.14
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