EFFECT OF EXTERNAL AUDITOR'S ATTRIBUTES ON FINANCIAL REPORTING QUALITY OF LISTED FOOD AND BEVERAGE FIRMS IN NIGERIA

Abstract

Concerns have been raised about the conflict of interest between the auditor's statutory role and the other services it may perform for a client which causes shareholders and other stakeholders to question the credibility, reliability, and ultimately quality of financial reports. As a result, this study examined the effect of external auditor's attributes on the financial reporting quality of listed food and beverage firms in Nigeria. For the purpose of this study, secondary data were explored, and the study adopted an ex-post facto research design. The population of this study comprised of the of the seventeen (17) Foods and Beverages firms listed on the Nigerian Exchange Group as at 31st December 2022, and ten (10) firms were selected as sample size using the purposive sampling techniques. Data were analysed using the panel multiple regression technique (fixed effect regression model) with the help of Statistical tool, Stata version 17.0. The study found out that only audit independence had a significant and positive effect on the quality of financial reporting of food and beverage firms in Nigeria, but audit firm size and audit tenure had positive but insignificant effects on the quality of financial reporting of food and beverage firms in Nigeria. However, the study found out that there was an overall significance of all the variables indicating that they jointly affect financial reporting quality of food and beverage firms in Nigeria. On this basis, the study recommends that management should not only focus on external auditor's independence as a measure of their gross fees but on other parameters such as familiarity which could also undermine the independence of the external auditors. Besides, that management should not only engage audit firms whose reputation cuts across size but also the use of technology in assessing the accuracy of the financial reports. Finally, the study recommends auditors' tenure of three years and above in order to improve the financial reporting quality of firms in Nigeria.