Impact of Audit Characteristics and External Auditor Quality on Financial Performance of Quoted Money Deposit Banks in Nigeria

This study is motivated and directed to investigate the effect of audit characteristics and external audit quality on the financial performance of money deposit banks quoted in the Nigeria Exchange Group (NEG). Thirteen publicly quoted banks of NEG have been selected as samples for this study. Data from the sampled banks have been collected from annual reports from 2015 to 2021. Pooled Ordinary Least Square (POLS) model was used for running the regression model of this study. The findings, audit committee financial expertise (ACFE) has a positive and significant relationship with ROA and ROE. However, Audit Committee Financial Expertise (ACFE) has a positive and insignificant relationship with EPS. On the other hand, Audit Committee Size (ACS) has a positive and significant relationship with ROA, which implies that the higher the audit committee size, the more ROA in Nigeria. External Audit Quality has a negative and significant relationship with EPS and ROA and a positive and insignificant relationship with ROE. Among all variables of the audit characteristics, the role of audit committee financial expertise has a consistent result in this study. This has given an insight that the fair appointment of audit committee members who are knowledgeable in finance contributes to the financial performance of quoted money deposit banks in Nigeria. The role of External Auditors’ quality in contributing to the financial performance of money deposit banks is not convincing in the context of Nigeria. We recommend that policymakers make it mandatory that only financial experts should be appointed as members of the Audit Committee of corporate bodies.