EFFECT OF AUDIT QUALITY ON THE FINANCIAL PERFORMANCE OF LISTED OIL AND GAS FIRMS IN NIGERIA
Abstract
This study investigates the effect of audit quality on the financial performance of listed oil and gas
firms in Nigeria. The primary objective is to examine how three key components of audit quality;
auditor's independence, audit tenure, and audit fee, affect Return on Assets (ROA) as a measure
of financial performance. The study focuses on the population of (8) eight oil and gas firms listed
on the Nigerian Exchange Group (NGX) as of 2024. Through purposive sampling, five (5) firms
were selected based on their availability of complete financial data for the period 2018–2023.
Data were collected from annual reports and financial statements, and the analysis was conducted
using descriptive statistics, Pearson correlation, and panel regression with the Ordinary Least
Squares (OLS) estimation technique. The results reveal that auditor's independence has a
significant positive impact on financial performance, suggesting that independent auditors are
likely to enhance the credibility of financial reporting, thereby improving firm performance. Audit
tenure, while showing a positive relationship with ROA, does not exhibit statistical significance,
indicating that the length of auditor-client relationships may not substantially affect performance
within the study period. Furthermore, audit fees were found to have a significant positive effect on
financial performance, implying that firms that invest in higher-quality audits, reflected in higher
fees, are likely to experience better financial outcomes. Based on these findings, the study
recommends that regulators enforce stringent policies to ensure auditor independence, and
companies should prioritize audit quality over cost-cutting measures. Additionally, while audit
tenure may offer some benefits, periodic reviews should be conducted to ensure continued audit
effectiveness. The findings contribute to the growing body of literature on the role of audit quality
in enhancing corporate financial performance, especially within the Nigerian oil and gas sector
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