Examining the Influence of Audit Tenure and Independence on Financial Performance of Cement Companies in Nigeria
DOI:
https://doi.org/10.61143/umyu-jafr.8(1)2025.014Keywords:
Audit quality, Audit tenure, Audit independence, financial performanceAbstract
The study examines the influence of audit tenure and independence on financial performance of cement companies in Nigeria, addressing a critical gap in the empirical literature. The study used quantitative research design, from 2013 and 2021. The data of the study was analysed using robust statistical techniques and panel least squares regression. The results reveal a significant positive relationship between auditor tenure and financial performance, auditor independence indicates a significant negative relationship with financial performance, indicating that compromised objectivity may detrimentally impact financial results. These findings stresses the complexities inherent in balancing audit tenure and independence to strength financial transparency and performance, particularly in sectors critical to Nigeria's economic growth, such as cement production. This research contributes valuable insights into the interplay between audit characteristics and financial performance, offering practical recommendations for stakeholders aiming to strengthen audit practices in the Nigerian context. Emphasis or focus on auditors' tenure and independence effectively, firms can improve their financial reporting integrity, thereby enhancing investor confidence and fostering sustainable economic development.
Metrics
References
Adewumi, A. D., Fakunle, I. O., Bamidele, M. M., & Akomolehin, I. A. (2024). Impact of auditor’s independence on earnings management of listed deposit money banks in Nigeria. Journal of Contemporary Accounting and Finance, 6(2), 1658–1670
Ahmad, I., Farida, M., & Mubarakatu, G. (2020). Audit quality and firm value of listed insurance companies in Nigeria. Asian Journal of Economics, Business and Accounting, 15(3), 1-12. https://doi.org/10.9734/ajeba/2020/v15i330212
Ahmed, A. I., & Mubarakatu, M. A. (2020). Audit quality and firm value of listed insurance companies in Nigeria. Journal of Accounting and Financial Management, 6(4), 12–25.
Amaha, H. Y., & Obi, P. C. (2020). The effect of audit quality on financial performance of manufacturing firms in Sub-Saharan Africa. African Journal of Economic and Management Studies, 11(4), 667–682.
Anil, G. (2016). Relationship between audit quality and corporate governance: An empirical research in Borsa Istanbul. Journal of Business and Management, 18(11), 84–88.
Babangida, S. A., Yusuf, M., & Adamu, M. (2022). Audit quality and firm financial performance: Evidence from listed companies in Nigeria. Journal of Accounting and Taxation, 14(3), 98–108.
Babatunde, M. A., Adedeji, L. O., & Adegbite, I. O. (2021). Audit quality and financial performance of banks in Nigeria. Journal of Accounting Information and Innovation, 7(2), 45-60.
Bappayo Masu Gombe, & Mukhtar, M. (2024). Corporate governance and challenges of financial leverage of privatised cement industry in Nigeria. Journal of Scientific Research and Reports, 30(6), 95–106. https://doi.org/10.9734/jsrr/2024/v30i62024
Brigham, E. F., & Houston, J. F. (2001). Fundamentals of financial management (9th ed.). Harcourt College Publishers.
Carey, P., & Simnett, R. (2006). Audit partner tenure and audit quality. The Accounting Review, 81(3), 653–676. https://doi.org/10.2308/accr.2006.81.3.653
Cheng, Y. S., Chen, Y. S., & Chen, Y. C. (2018). Direct and mediating effects of auditor quality on auditor size and performance. International Business Research, 11(6), 134–148. https://doi.org/10.5539/ibr.v11n6p134
Chukwuma, R. E., Lilian, O. N., & Sonia, U. O. (2020). Audit quality and financial performance of listed deposit money banks in Nigeria. International Journal of Academic Research in Accounting, Finance and Management Sciences, 10(3), 145–156.
Egan, M., & Yanxi, W. (2020). The true and fair view: Exploring how managers, directors and auditors define it. Accounting and Business Research, 50(6), 621–645. https://doi.org/10.1080/00014788.2020.1779586
Emmanuel, I. O., & Uzoka, P. (2022). Effect of auditor tenure on audit quality in Nigeria. International Journal of Social Sciences and Management Review, 5(2), 88–100. https://doi.org/10.37602/ijssmr.2022.5207
Ems, L., & Young, J. J. (2013). Governance, audit quality, and the public interest: Reassessing roles and responsibilities. Accounting, Organizations and Society, 38(2), 145–163.
Eneiksi, G. D., & Micah, L. C. (2021). Audit quality indicators and market price per share of listed deposit money banks in Nigeria. Asian Journal of Economics, Business and Accounting, 21(9), 33–42.
Eneisik, G. O., Erasmus, L., & Micah, L. C. (2021). Audit quality and market price per share of listed deposit money banks in Nigeria. International Journal of Business and Law Research, 9(4), 1–22.
Enekwe, C., Chike, N., & Sergius, N. (2020). Effect of audit quality on financial performance of listed manufacturing firms in Nigeria. Advance Journal of Management, Accounting and Finance, 5(3), 1-15.
Ezejiofor, R. A., Raymond, E. A., & Erhirhie, F. E. (2018). Effect of audit quality on the financial performance of listed deposit money banks in Nigeria. International Journal of Trend in Scientific Research and Development, 2(6), 1121–1129. https://doi.org/10.31142/ijtsrd18867
Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman.
Hadiza, S. A., & Abba, B. (2024). Effect of audit fees and audit tenure on earnings management of listed deposit money banks in Nigeria. Asian Journal of Economics, Business and Accounting, 24(7), 588–597. https://doi.org/10.9734/ajeba/2024/v24i71432
Kaoje, A. N., & Haruna, H. A. (2023). An analysis of firm performance and real earnings management of listed cement firms in Nigeria. International Journal of Intellectual Discourse, 6(3), 212–224.
Koop, G. (2009). Bayesian econometrics. Wiley.
Kwabena, K. A. (2017). The effects of internal audit quality on financial performance of firms listed at the Nairobi Securities Exchange. http://erepository.uonbi.ac.ke/handle/11295/101200
Lin, H. L., & Yen, A. R. (2022). Auditor and audit engagement characteristics. Accounting Forum, 44(4), 398–420. https://doi.org/10.1080/01559982.2020.1727177
Mohammed, A., Yahaya, A., & Zakariya, M. (2022). Audit quality, tenure and real earnings management of listed non financial firms in Nigeria. Gusau Journal of Accounting and Finance, 3(1), 18. https://doi.org/10.57233/gujaf.v3i1.128
Monametsi, G. L., & Agasha, E. (2020). Audit quality and firm performance: Evidence from Botswana and Uganda. Journal of Accounting, Finance and Auditing Studies, 6(4), 79–95. https://doi.org/10.32602/jafas.2020.029
Mustafa, M. K., & Abdulwahab, N. A. (2018). Audit quality and firm value of listed oil and gas firms in Nigeria. Journal of Accounting and Taxation, 10(5), 55–65.
Neri, L., & Russo, A. (2014). A framework for audit quality: Critical analysis. Business and Management Review, 3(9), 25–30. http://gala.gre.ac.uk/14798/
Nigerian Exchange Group. (2022). Homepage. Nigerian Exchange Group. https://www.ngxgroup.com/
Ogbodo, S. O., Okenwa, O. C., Akabuogu, J. A., & Nzube, N. U. (2019). Audit quality and corporate performance: Evidence from selected Nigerian banks. International Journal of Finance and Accounting, 8(5), 213–221.
Ogbonna, G. N., Onuaha, T. E., & Christopher, I. S. (2020). Audit quality and financial performance of quoted firms in Nigeria. West African Journal of Business and Management Sciences, 9(1), 14–43.
Okolie, A. O. (2021). Auditor tenure, independence, and audit quality: Evidence from listed firms in Nigeria. Journal of Accounting and Taxation, 13(2), 56-67. https://doi.org/10.5897/JAT2021.0482
Okolie, A. O., & Izedonmi, F. I. O. (2014). The impact of audit quality on the share prices of quoted companies in Nigeria. Research Journal of Finance and Accounting, 5(18), 150–166.
Olayinka, M. U., Bello, A. M., & Oladele, T. T. (2023). Audit characteristics and financial performance of cement manufacturing firms in Nigeria. International Journal of Accounting and Finance Research, 11(2), 25–39.
Onwujekwe, O. C., Akinyemi, O. O., & Nwankwo, O. C. (2019). Audit tenure, audit independence and quality of financial reporting in Nigerian quoted companies. International Journal of Accounting and Finance, 8(1), 45–60.
Pred, R., Silva, M., & Knudsen, L. (2024). Enhancing internal audit quality: Professional standards, objectivity, and best practices. International Journal of Auditing, 28(1), 45–62.
Santos, C., Cerqueira, A., & Brandao, E. (2015). Audit fees, non-audit fees and corporate performance 562. University of Porto.
Suraj, I. A. (2017). The effect of internal audit on financial performance of microfinance institutions in Kenya. http://erepository.uonbi.ac.ke/handle/11295/102988
Tom, L., & Ying, C. (2018). Audit quality and financial performance of companies in China. Asian Journal of Accounting Research, 3(2), 98–110.
Ugwu, C. C., Aikpitanyi, L. N., & Idemudia, S. (2020). The effect of audit quality on financial performance of deposit money banks (evidence from Nigeria). Journal of Economics and Business, 3(1), 1–15. https://doi.org/10.31014/aior.1992.03.01.196
Vanstraelen, A. (2000). Impact of renewable long-term audit mandates on audit quality. European Accounting Review, 9(3), 419–442. https://doi.org/10.1080/09638180020017140
Wan, Y., Liu, J., & Zhang, X. (2022). Auditor tenure and audit quality: Evidence from emerging markets. Journal of International Accounting, Auditing and Taxation, 47, 100493. https://doi.org/10.1016/j.intaccaudtax.2022.100493
Watts, R. L., & Zimmerman, J. L. (1983). Agency problems, auditing, and the theory of the firm: Some evidence. Journal of Law and Economics, 26(3), 613–633. https://doi.org/10.1086/467051
Yang, J. (2020). Auditor independence and financial transparency: Implications for investor confidence and market stability. Journal of Accounting and Auditing Studies, 12(3), 45–60.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 UMYU Journal of Accounting and Finance Research
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
