EFFECT OF AUDITORS’ INDEPENDENCE ON FINANCIAL REPORTING QUALITY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This paper examines the effect of auditors’ independence on the financial reporting quality of listed deposit money banks in Nigeria from 2015-2020. Data for the study was collected from the annual reports and accounts of the ten (10) sampled deposit banks and panel regression analysis was used as a technique for data analysis. The study finds that there is an insignificant negative
relationship between audit tenure (AUDTEN), firm size (FSIZE) and financial reporting quality using earning management as a measure. Audit fee (AFEE) and leverage (EBLLA) however exhibit a positive insignificant relationship with earning management (EMGT). The study recommends that regulatory authorities should regulate how much firms pay as audit fees in order to ensure better earnings management for money deposit money banks in Nigeria, money deposit banks in Nigeria should always strengthen their auditors’ independence according to lay down policies, Security and Exchange Commission should continue to uphold the policy of ensuring that tenure of auditors is more stable. Money deposit banks in Nigeria should continue to maximize opportunities and advantages that align with firms operating in the market for better improvement in operations and an increase in earning management since some firms are able to enjoy larger economies of scale.