AUDITOR’S INDEPENDENCE AND AUDIT QUALITY: EVIDENCE FROM LISTED COMMERCIAL BANKS IN NIGERIA

ABSTRACT

In this study, we aim to evaluate the effect of auditor’s independence on audit quality of listed banks in Nigeria. The scope of this study covers a 10 year period ranging from 2010 to 2019. The independent variables of interest which the researcher employed in other to ascertain the possible effect of audit independence on audit quality include; auditors’ opinion, joint auditor, audit fees and auditor’s tenure. In this study, the researcher conducted pre regression analysis which includes descriptive statistics, correlation matrix, and normality of residua analysis. Basically, the pooled logistic regression analysis was first conducted and diagnostic tests were carried out to check if it violates the basic assumptions of logistic regression. The outcome from the pooled logistic estimation reveals that; auditor’s opinion has no significant likelihood to determine audit quality of listed deposit money banks in Nigeria; joint auditor has a negative significant likelihood to determine audit quality of listed deposit money banks in Nigeria; auditor’s fees have a positive significant likelihood to determine audit quality of listed deposit money banks in Nigeria; auditor’s tenure has no significant likelihood to determine audit quality of listed deposit money banks in Nigeria. Based on the findings of the study, the researcher concludes that the joint auditors and auditor’s fees significantly determine audit quality of listed deposit money banks in Nigeria. We recommend a careful managerial decision regarding increasing audit fees since it usually has economic implications on firms' earnings. However, regulatory bodies should ensure strict compliance with the relevant requirements of corporate governance structures in fostering audit quality.