AUDIT QUALITY AND FINANCIAL PERFORMANCE IN PUBLICLY QUOTED CONSUMER GOODS COMPANIES IN NIGERIA

Abstract

This study examined the impact of audit quality on financial performance of consumers’ manufacturing organizations in Nigeria. Ex-post facto research design was used. Financial performance which is dependent variable is proxied with return on asset (ROA) while audit quality which is the independent variable is proxied with auditors’ experience, audit fee and auditors’ independence. The population of the study is listed consumer goods firms on Nigerian Exchange Group (NGX) and a sample of 10 firms were selected for a period of 10 years (2013 - 2022). This study made use of E-view package version 10.0 to analyze the data. Secondary data were taken from the yearly financial reports of 10 consumer products businesses that are listed on the "Nigerian Exchange Group" (NGX). Data were analyzed using descriptive and inferential statistics. The hypotheses were tested at 0.05 significance level. The results show that auditors experience (AE), audit fees (AF), and auditors’ independence (AI) have positive relationship with return on asset (ROA) of quoted consumer goods companies in Nigeria. In addition, there is evidence that AE, AF and AI have insignificant relationship with ROA in quoted consumer goods companies in Nigeria (AE= 0.305, t-test= 0.348, p > 0.05, AF= 0.022, t-test= 0.354, p > 0.05 and AI =0.079, t-test= 1.269, p > 0.05). This implies that auditors’ experience, audit fee and auditors’ independence are insignificant factors influencing changes in the financial performance of quoted consumer goods companies in Nigeria. Also, this study reveals an insignificant but positive correlation between audit quality and financial performance. The study concluded that audit quality does not have a significant effect on financial performance. It was recommended that the management of companies should appoint external auditors with relevant industry experience at a reasonable fee, and they should also create enabling environment for external auditors’ independence as it affects financial performance.