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Effect of Audit Assurance on Financial Performance of Listed Manufacturing Firms in Sub-Saharan Africa

Abayomi O. ASUBIOJO, Olayinka I. OLUWAGBADE, Olusola E. IGBEKOYI

Abstract

Investors' confidence is enhanced globally through quality assurance practices that will increase the credibility of the business process and the audited financial statement. Poor assurance practices have led to the inability to meet up with the dynamic changes in stakeholder expectations in recent times. The study evaluated the effect of audit assurance on financial performance of listed manufacturing firms in sub-Saharan Africa. The study adopted ex-post facto and explanatory research design. Descriptive statistics characterized each variable, while regression design assessed relationship magnitude and independent variables' influence. Secondary sources provided data from audited annual and sustainability reports of 146 manufacturing companies publicly listed on stock exchanges in sub-Saharan African nations. Criterion sampling technique determined the sample size, including companies listed before 2011 and remaining listed without delisting, totaling 62 companies classified into material products, consumer goods, healthcare goods, and industrial sectors. The regression analysis revealed significant findings between Assurance (auditors’ international affiliation, joint audit, switching and Audit specialization) and financial performance (ROA, ROE and EVA). The result shows that the relationship between auditor international affiliation had a significant positive effect on ROA, EVA, and ROE. Joint audit revealed a significant negative effect on all measures of financial performance ROA; ROE; EVA; audit switching also had a positive insignificant effect on ROE and EVA, but negative insignificant effect on ROA. Audit specialization, however, had a positive significant effect on ROA and ROE, while its effect on EVA is positively insignificant. The study concluded that audit assurance enhances investors’ confidence which boosts financial performance. Therefore, the study recommends that Sub-Saharan African manufacturing firms sho

Keywords

AssuranceAuditor International AffiliationJoint AuditAudit Switching and Audit

References

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