An Econometric Appraisal of the Determinants of Audit Quality: Aperspective on   External Auditor Independence

Ensuring the independence of external auditors is fundamental to achieving trustworthy and dependable audit reports. When auditors operate without bias, they present an honest view of an organization’s finances, giving shareholders confidence that their assets are being used efficiently to create value. This research explores the factors influencing audit quality, with a primary focus on auditor independence. Employing an ex-post facto design, the study relied on secondary data extracted from the audited financial reports of 14 Deposit Money Banks (DMBs) listed on the Nigerian Stock Exchange. To ensure methodological rigor, dynamic panel regression analysis was utilized, as it offers advantages over traditional regression approaches. Additionally, the Hausman specification test was conducted to validate the selection of a fixed effects model. The findings revealed that when audit quality was evaluated through the lens of earnings management, factors such as audit firm rotation, financial leverage, and client size had significant impacts. However, when audit quality was assessed using the Big Four audit firm affiliation, variables like audit tenure, audit fees, non-audit services, and client size were positively linked to better audit quality. The research concludes that the variables influencing audit quality differ depending on the specific criteria used to define and measure it.