Auditor’s Independence and Quality of Financial Reporting in Listed Real Estate and Construction Firms in Nigeria

Abstract

This study investigates the impact of auditor’s independence on audit quality of listed real estate/construction companies on the Nigerian Exchange Group from 2012 to 2021. The study made use of ex-post facto research design and since the entire population was below ten firms, census sample approach was adopted. Secondary data of the firms were sourced from audited financial statements of the nine companies used for the study. Data were analyzed using descriptive statistics, correlation matrix and panel regression technique. The findings showed that there was a significant negative relationship between audit firm tenure and audit quality while the relationship between audit firm rotation and audit quality was positive and statistically insignificant. Company size showed a strong positive relationship with audit quality. Thus the study recommends that real estate/construction firms in Nigeria should make use of the services of audit firms with unquestionable track records of audit quality and reputation. In addition, real estate/construction firms in Nigeria should continually employ the services of one of the big audit firms whose character and integrity are beyond reproach. Lastly, the study recommends that management of quoted real estate/construction firms in Nigeria should consider increasing audit fees as benefits accruable to the firms far outweigh relevant costs