Audit Firm Characteristics and Audit Quality in Nigeria

Ilaboya Ofuan James; Ohiokha Friday Izien

doi:doi:10.11648/j.ijber.20140305.14

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Audit Firm Characteristics and Audit Quality in Nigeria

Ilaboya Ofuan James, Ohiokha Friday Izien

Published in International Journal of Business and Economics Research (Volume 3, Issue 5)

Received: 22 October 2014 Accepted: 29 October 2014 Published: 30 October 2014

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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.

Published in	International Journal of Business and Economics Research (Volume 3, Issue 5)
DOI	10.11648/j.ijber.20140305.14
Page(s)	187-195
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Audit Quality, Audit Tenure, Audit Independence, Board Independence

References

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APA Style

Ilaboya Ofuan James, Ohiokha Friday Izien. (2014). Audit Firm Characteristics and Audit Quality in Nigeria. International Journal of Business and Economics Research, 3(5), 187-195. https://doi.org/10.11648/j.ijber.20140305.14

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ACS Style

Ilaboya Ofuan James; Ohiokha Friday Izien. Audit Firm Characteristics and Audit Quality in Nigeria. Int. J. Bus. Econ. Res. 2014, 3(5), 187-195. doi: 10.11648/j.ijber.20140305.14

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AMA Style

Ilaboya Ofuan James, Ohiokha Friday Izien. Audit Firm Characteristics and Audit Quality in Nigeria. Int J Bus Econ Res. 2014;3(5):187-195. doi: 10.11648/j.ijber.20140305.14

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@article{10.11648/j.ijber.20140305.14,
  author = {Ilaboya Ofuan James and Ohiokha Friday Izien},
  title = {Audit Firm Characteristics and Audit Quality in Nigeria},
  journal = {International Journal of Business and Economics Research},
  volume = {3},
  number = {5},
  pages = {187-195},
  doi = {10.11648/j.ijber.20140305.14},
  url = {https://doi.org/10.11648/j.ijber.20140305.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20140305.14},
  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.},
 year = {2014}
}

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TY  - JOUR
T1  - Audit Firm Characteristics and Audit Quality in Nigeria
AU  - Ilaboya Ofuan James
AU  - Ohiokha Friday Izien
Y1  - 2014/10/30
PY  - 2014
N1  - https://doi.org/10.11648/j.ijber.20140305.14
DO  - 10.11648/j.ijber.20140305.14
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 187
EP  - 195
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20140305.14
AB  - 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.
VL  - 3
IS  - 5
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Author Information

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

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APA Style

Ilaboya Ofuan James, Ohiokha Friday Izien. (2014). Audit Firm Characteristics and Audit Quality in Nigeria. International Journal of Business and Economics Research, 3(5), 187-195. https://doi.org/10.11648/j.ijber.20140305.14

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ACS Style

Ilaboya Ofuan James; Ohiokha Friday Izien. Audit Firm Characteristics and Audit Quality in Nigeria. Int. J. Bus. Econ. Res. 2014, 3(5), 187-195. doi: 10.11648/j.ijber.20140305.14

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AMA Style

Ilaboya Ofuan James, Ohiokha Friday Izien. Audit Firm Characteristics and Audit Quality in Nigeria. Int J Bus Econ Res. 2014;3(5):187-195. doi: 10.11648/j.ijber.20140305.14

Copy | Download

@article{10.11648/j.ijber.20140305.14,
  author = {Ilaboya Ofuan James and Ohiokha Friday Izien},
  title = {Audit Firm Characteristics and Audit Quality in Nigeria},
  journal = {International Journal of Business and Economics Research},
  volume = {3},
  number = {5},
  pages = {187-195},
  doi = {10.11648/j.ijber.20140305.14},
  url = {https://doi.org/10.11648/j.ijber.20140305.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20140305.14},
  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.},
 year = {2014}
}

Copy | Download

TY  - JOUR
T1  - Audit Firm Characteristics and Audit Quality in Nigeria
AU  - Ilaboya Ofuan James
AU  - Ohiokha Friday Izien
Y1  - 2014/10/30
PY  - 2014
N1  - https://doi.org/10.11648/j.ijber.20140305.14
DO  - 10.11648/j.ijber.20140305.14
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 187
EP  - 195
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20140305.14
AB  - 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.
VL  - 3
IS  - 5
ER  -

Copy | Download