AUDIT COMMITTEE INDEPENDENCE AND AUDIT QUALITY OF NIGERIA LISTED DEPOSIT MONEY BANKS

Authors

  • Grace Omoyeni Adewinmisi Department of Accounting, Faculty of Management Sciences, Nigerian Defence Academy, Kaduna, Kaduna State, Nigeria
  • Mohammed Ahmed Department of Accountancy, Federal Polytechnic, Bida, Niger State, Nigeria
  • Onipe Adabenege Yahaya PhD3 Department of Accounting, Faculty of Management Sciences, Nigerian Defence Academy, Kaduna, Kaduna State, Nigeria

Keywords:

Audit Committee, audit quality, banks, big4, independence, Nigeria

Abstract

Due to the failures of several corporations worldwide, interest in audit quality along with other corporate governance measures has become a matter of interest among corporations’ stakeholders. Furthermore, findings from several empirical literature are mixed and inconsistent. Also, there is the added advantage of the simplicity of the sector, model and method used in this article. Most of the past studies were carried out in developed countries; this present study looks at evidence from emerging countries. Consequent upon these, we interrogated the place of audit committee independence in audit quality. The study used Principal Component Analysis to select the audit committee characteristic to investigate. In addition, we examined data from 13 publicly traded deposit money banks from 2011 to 2020. We developed a Probit regression model that incorporates auditor independence as an audit quality determinant. The paper used Panel Corrected Standard Error in the regression method and established that independence loads negatively and significantly with the quality of the audit. Model specification error test (linktest and ovtest) rejects the initial inclusion of control variables such as gender, size and meetings. The residual indicated that there was a need for transformation (cubic root) and an absence of heteroskedasticity. The paper provided practical and policy implications for investors, managers, regulators, policymakers, users of financial reports and accounts, researchers and governments. Banks should appoint credible and knowledgeable people to the audit committee.

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Published

2022-09-01

How to Cite

Adewinmisi, G. O., Ahmed, M., & Yahaya , O. A. (2022). AUDIT COMMITTEE INDEPENDENCE AND AUDIT QUALITY OF NIGERIA LISTED DEPOSIT MONEY BANKS. TSU-International Journal of Accounting and Finance, 1(3), 16–26. Retrieved from https://tsuijafc.k-publisher.com/index.php/tsuijaf/article/view/45