AUDIT FIRM CHARACTERISTICS AND FINANCIAL REPORTING QUALITY OF LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA

Abstract

This study explores the impact of audit firm characteristics and financial reporting quality of listed industrial goods firms in Nigeria. This study uses data from eleven (11) selected firms from 2014-2023.The data were sourced from annual report of listed Industrial goods firms. Multiple regression was used to analyze the data sourced. The study revealed that audit firm independence has a positive and significant impact on financial reporting quality.
The impact between audit firm tenure and financial reporting quality was found to be positive but insignificant. However, the audit firm size was found to be positive and significantly related to financial reporting quality. Therefore, the study recommended that industrial goods firms should prioritize investing in measures that strengthen audit firm independence, such as stricter auditor rotation policies and reduced non-audit services.
Regulators should also enforce stronger requirements for auditor independence to ensure unbiased financial assessments. Larger audit firms may be associated with better financial reporting quality due to their greater resources, expertise, and robust quality control processes. While longer audit engagements may not significantly impact audit effectiveness, firms should still monitor their audit firm's performance to prevent over- familiarity or complacency.