Audit Characteristics and Financial Reporting Quality of Listed Industrial Goods Firms in Nigeria

This study examined the effect of audit characteristics on the financial reporting quality of listed industrial goods companies in Nigeria. Specifically, the study investigated the effects of audit fee and audit tenure on financial reporting quality, while firm size and leverage were included as control variables. An ex post facto research design was adopted, using secondary data extracted from the annual reports and accounts of eleven listed industrial goods companies on the Nigerian Exchange Group (NGX) over a 10-year period from 2015 to 2024. The study utilized panel data comprising 110 firm-year observations. Financial reporting quality was proxied by discretionary accruals, while the data were analyzed using descriptive statistics, Pearson correlation analysis, and panel least squares regression. The findings revealed that audit fee has a positive and statistically significant effect on financial reporting quality (β = 0.0824, p< .001). Similarly, audit tenure exerts a positive and statistically significant effect on financial reporting quality (β = 0.0657, p< .001). The model explained approximately 68.4% of the variation in financial reporting quality (Adjusted R² = .6719) and was statistically significant (F = 55.374, p< .001). The study concludes that audit characteristics significantly enhance the financial reporting quality of listed industrial goods companies in Nigeria. It therefore recommends that firms engage competent external auditors, provide adequate audit fees to facilitate quality audit services, and maintain optimal audit tenure in compliance with regulatory requirements to strengthen the credibility and reliability of financial reporting.