Audit Quality and the Financial Performance of Listed Agricultural Firms in Nigeria
DOI:
https://doi.org/10.65336/WJEBM.2026.31102Keywords:
audit firm size, audit tenure, audit fees, auditor independence, return on assets, NigeriaAbstract
This study investigates how audit quality shapes the financial performance of agricultural firms quoted on the Nigerian Exchange Group. Drawing on Agency Theory, it isolates four widely used audit quality proxies — audit firm size, audit tenure, audit fees, and auditor independence — and tests their effect on Return on Assets (ROA) over the period 2016–2025. An ex-post facto design was adopted, and a census of the five agricultural firms listed on the Exchange yielded a balanced panel of 50 firm-year observations from published annual reports and audited financial statements. Descriptive statistics, correlation analysis, and diagnostic checks for multicollinearity and heteroskedasticity preceded pooled ordinary least squares estimation. The results show that audit firm size, audit fees, and auditor independence exert positive and statistically significant effects on ROA, whereas audit tenure, though positively signed, is insignificant. The model explains about 60% of the variation in firm performance and is jointly significant. The study concludes that credible, well-resourced, and independent external audits strengthen reporting quality and support superior financial performance. It recommends that agricultural firms engage reputable audit firms, remunerate audits adequately, and institutionalize safeguards for auditor independence.
JEL Classification: M41; M42; Q14.
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