SOURCE:

Faculty: Management Sciences
Department: Accountancy

CONTRIBUTORS:

Aggreh, M.
Okoye, E. I.
Ifurueze, S. M.

ABSTRACT:

The objective of this study is to ascertain the effect of audit market concentration and auditor’s attributes on audit quality in the Nigerian manufacturing sector. Specificallyit aimed at finding out the impacton relative audit market concentration (RAMC), absolute audit market concentration (AAMC), auditors’ independence (AUIND), auditors’ tenure (AUTEN) and audit risk (AUDRISK) on audit quality (AQ) in the Nigerian manufacturing sector. The study employed anex post factoresearch design because the data for the study was extracted from archived of past events. The study was restricted to Nigerian manufacturing firms.Simple random sampling technique was employed to select 52 firms quotedon the Nigerian Stock Exchange as at 31st December, 2015. The study covered a period of 15 years from 2001 – 2015, forming an observation of 780 firm-year observation in the Nigerian audit market. Data on relative audit market concentration, absolute audit market concentration, auditor’s independence, audit tenure and audit firm size were obtained from secondary sources (annual reports and accounts) and subjected to the regression analysis using the pooled OLS and Panel EGLS. Theresult shows that there is a negative relationship between audit quality and relative audit market concentration, absolute audit market concentration, auditor tenure, audit firm size and rendering of non-audit services while auditor independence and audit fee have a positive relationship with audit quality.The study recommended that professional bodies, management and auditors should introduce alternative appointment processes for auditors.Again, regulators and standards setters should come up with early warning systems of significant threats to the operations of a ‘Big 4’ firm; while investors should find a way of ensuring that the largest institutional investors act together to influence large companies to consider ‘Mid-Tier’ audit firms, as they usually get the changes they are looking for in the interest of all and sundry.