Effect of Audit Independence on the Financial Reporting Quality of Listed Deposit Money Banks in Nigeria

Samson Ojeme Samuel and Owolabi Joseph Alade
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Samson Ojeme Samuel: Department of Accounting, Achievers University, Owo, Ondo State, Nigeria.
Owolabi Joseph Alade: Department of Accounting, Achievers University, Owo, Ondo State, Nigeria.

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 6, 4197-4218

Abstract: This study examines the effect of audit independence on the financial reporting quality of listed deposit money banks in Nigeria. The objectives are to explore the impact of audit fees, audit firm size, and audit tenure on financial reporting quality. An ex-post facto research design was adopted, employing both descriptive and inferential statistics to analyze data from 14 Nigerian listed deposit money banks, using secondary data from their annual reports (2016–2023). Panel regression models were applied, utilizing common, fixed, and random effects to account for cross-sectional and time effects. The findings indicate that higher audit fees exert a negative but statistically significant impact on financial reporting quality (P-Value 0.05). The study concludes that audit independence, particularly regarding audit fees and firm size, can undermine financial reporting quality. This highlights the need for regulatory reforms to ensure auditors’ independence. It recommends further exploration into the regulatory and professional standards to address these challenges in Nigeria’s banking sector.

Date: 2025
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