Effect of Audit Quality On The Financial Performance Of Listed Parastatals In

Abstract

Financial statement audit is an important tool for reducing information asymmetries and maintaining an efficient market environment. However, if the audit is to improve financial performance, there must be credibility and reliability as regards audited financial information. This research work was designed to examine the effect of audit quality on financial performance of listed parastatals in NSE. The study specifically investigated the relationship between, the auditor’s independence; size of the audit firm; Attributes of the audit team and experience of the auditor and Financial Performance of Listed Parastatals in NSE. The study was descriptive in nature with data drawn from certified public accountants working for listed State Corporations. Primary data was collected by the use of semi-structured questionnaires whereas secondary data was obtained basically from the published annual reports and financial statements, and notes to the financial statements of the listed state corporations in NSE. Descriptive statistics such as mean, standard deviation and frequency distribution was used to analyze the data. Data presentation was done by the use of pie charts and tables for ease of understanding and interpretation. Multiple regression analysis using the SPSS Version 20.0 was employed in analysing the data and testing the research questions. Findings of the study indicate that the effect of audit quality on financial performance is positive and significant and the greater the degree of an auditors independence, the greater the propensity of a firm making substantial net profit margins. The impact of auditor size is also positive and significant, although, its impact is lesser that of auditor independence.