Effects of Audit Firm Attributes on Earnings Quality of Listed Consumer Goods Firms in Nigeria

Abstract

External auditors have been identified by researchers to have an immeasurable role in enhancing the discretional accrual of companies. However, an important audit attribute which is audit tenure have not been considered in the non-financial sector in Nigeria and available literatures in this area have not considered the consumer goods sector in Nigeria. Therefore, this study investigates the effect of audit firm attributes on earnings quality of listed consumer goods firms in Nigeria. Discretional accrual is the dependent variable with audit tenure is the independent variables and firm size as control variable. Data for the study were obtained from the audited annual report of the 15 sampled consumer goods firms for a period of 10 years covering 2011 to 2020. The study employed fixed effect model regressions as tool for analysis. The result shows that audit tenure has no significance effect on discretional accrual of the firms. For consumer goods firms to achieve higher discretional accrual and provide quality financial information for effective decision making, it is therefore recommended shareholders of consumer goods firms should be more inclined in employing the services of audit firms that have experience and understands the financial complexity of firms in the industry. This is because such auditors will be able to select and implement audit procedures that are precise and effective when delivering their service. This may go a long way in improving discretional accrual.