Does board size, audit firm tenure, and audit firm size affect audit quality of listed companies in Nigeria?

Abstract

Purpose: The study examined the determinants of audit quality among listed oil and gas, agriculture, and natural resources firms in Nigeria by assessing the influence of board size, audit firm tenure, and audit firm size. The study was anchored on agency theory and resource dependency theory to explain how governance structures and auditor characteristics shape audit quality outcomes.

Methodology: An ex-post facto research design was adopted, using secondary data obtained from all 19 listed firms of the sectors under study in Nigeria over a ten-year period (2014–2023). The dataset was analyzed using Panel Generalized Least Squares (PGLS) regression to determine the extent to which board size, audit firm tenure, and audit firm size impact audit quality.

Results and Conclusion: The study shows that board size, audit firm tenure, and audit firm size each have positive and significant effects on audit quality. Larger boards enhance oversight, longer auditor–client relationships strengthen audit understanding, and larger audit firms provide superior expertise and resources. Overall, these factors are key determinants of audit quality in Nigeria’s oil and gas, agriculture, and natural resources sector.

Implication of Findings: The findings suggest that stronger governance structures—through adequately sized boards, optimal auditor tenure, and the use of reputable audit firms—can significantly improve audit quality. These insights support policy and regulatory efforts aimed at enhancing the credibility of financial reporting in Nigeria’s primary goods sector.