Impact of Audit Firm Size on Earnings Quality of Quoted Industrial Goods Companies in Nigeria
Abstract
The study examined the effect of audit firm size on the earnings quality of quoted industrial goods companies in Nigeria, with specific focus on earnings predictability and earnings persistence[cite: 219]. [cite_start]Two research objectives, questions, and hypotheses were formulated to guide the study[cite: 220]. [cite_start]An ex-post facto research design was adopted, utilizing secondary data extracted from the audited financial statements and annual reports of selected industrial goods companies listed on the Nigerian Exchange Group (NGX) for the period 2013-2023[cite: 221]. [cite_start]The population consisted of thirteen (13) quoted industrial goods companies, with a purposive sampling technique employed to select ten (10) firms with complete and reliable financial data[cite: 222]. [cite_start]Data analysis was conducted using descriptive statistics and Panel Ordinary Least Squares (OLS) regression, including fixed and random effects diagnostics[cite: 223]. [cite_start]The results revealed that audit firm size has a positive and significant effect on both earnings predictability and earnings persistence of quoted industrial goods companies in Nigeria[cite: 224]. [cite_start]This indicates that engaging larger, reputable audit firms enhances the transparency, reliability, and stability of financial reports in the industrial goods sector[cite: 225]. [cite_start]It was concluded that audit firm size is a critical determinant of earnings quality, which strengthens investor confidence and corporate governance[cite: 226]. [cite_start]It was recommended that quoted industrial goods companies prioritize engaging well-resourced audit firms, while regulatory bodies encourage policies that support the use of high-quality auditors to enhance financial reporting reliability[cite: 227].
