Nexus Between Audit Business Risk, Audit Quality and Audit Firm Size of Listed Health Pharmaceutical Firms in Nigeria

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Authors: AGBONMWANRE, Eric A., ABUSOMWAN Rachael E. (PhD) & JACKSON-AKHIGBE, Beauty E. (PhD)

Abstract

The aim of this study was to investigate the relationship between audit business risk, audit quality and audit firm size in Nigeria. The study used ex-post facto research design where the secondary data were collected from Health and Pharmaceutical Firms listed in the Nigeria Exchange Group. The study used simple random sampling technique to select six (6) firms for the period covering 2012 to 2023 and analysed using descriptive statistics, correlation analysis and binary regression technique with the aid of EViews 13.0 econometric software. The results showed that audit business risk has a negative and insignificant relationship with audit firm size at p-value >0.05 and audit quality has a positive and a significant relationship with audit firm size at 1% level of significance. The study recommended that the management of health and pharmaceutical listed firms in Nigeria should ensure that a reasonable amount is paid to the external auditors for timely and quality reporting of financial statements. The study's implication is that management's choice of larger audit firms has the potential to improve the level of audit quality.

Keywords: Audit Firm Size, Audit Quality, Audit Risk of Business, Binary Regression Model

2024 - NIJAF - 16 - 209 AGBONMWANRE, ET AL. 104-119.pdf

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