Audit Attributes and Earnings Quality of Quoted Oil and Gas Firms in Nigeria

Andrew E.O Erhijakpor; FCA; Uyo; Elohor

doi:10.56201/jafm.vol.12.no3.2026.pg369.382

📄 Download Paper

Audit Attributes and Earnings Quality of Quoted Oil and Gas Firms in Nigeria

Andrew E.O Erhijakpor, FCA, Uyo, Elohor

Abstract

The oil and gas sector of the Nigerian economy is a major source of revenue for the nation, thus financial statement disclosed in this sector is crucial to retain investors’ confidence. However, there have been growing concern as the sector has been reporting cases of earnings manipulations despite the regulatory reforms. The study was motivated by the persistent cases of audit failures, earnings manipulation and financial misreporting in the oil and gas sector in Nigeria which has eroded investors’ confidence and credibility of financial disclosures. It is on this basis that the study examined the effect of audit attributes on earnings quality of quoted oil and gas firms in Nigeria from 2014 to 2024. The study was anchored on agency, signaling and stakeholder theory. Secondary data were extracted from the audited annual reports of quoted oil and gas firms in Nigeria. Earnings quality being the dependent variable was measured by discretionary accruals derived using the modified Jones model, while audit attributes, the independent variable was measured by audit firm fees , audit firm size , audit firm rotation , audit report timeliness and audit committee financial expertise with firm size as control variable. Panel data were analyzed using the generalized linear model estimation technique. The findings revealed that AFS exert positive significant effect on earnings quality. AFZ and ACX had positive but statistically insignificant effect on earnings quality. Conversely, AFR and ART displayed negative but insignificant effect on earnings quality of quoted oil and gas firms in Nigeria. The study concludes that audit attributes influence earnings quality of quoted oil and gas firms in Nigeria but their influence varies in direction and magnitude. The study recommends that Financial Reporting Council of Nigeria should collaborate with professional bodies such as ICAN, ANAN, etc. to develop a standardized benchmark audit fees charged by external auditors so as to discourage charging of fees that threatens auditor objectivity in order to ensure transparency. Also, SEC should set deadlines for publication of audited reports to enhance investors’ confidence and timeliness of information. Key Words: oil and gas, audit attributes, earnings quality, audit fees, audit size, audit report, investors. JAFM

Keywords

oil and gasaudit attributesearnings qualityaudit feesaudit sizeaudit reportinvestors. JAFM

References

Abeygunasekera, A. W. J. C., Weerasuriya, R.M.I.H. Kehelwalatenna, S. (2021). Effect of Attributes of Audit Committee on Financial Performance: The Case of Sri Lanka. Global Review of Accounting and Finance, 12(1), 43–57. Adekanmi A. D, Ali-Momoh, B. O, Adeoye, E. T & Isinkaye, T. P. (2024). Audit Attributes: An Evaluation of the Perception of Financial Reporting Quality of Listed Non-Financial Firms in Nigeria. Fuoye Journal of Accounting and Management, 7(1), 313-324. Adeusi, S. A. (2023). Do Audit Firms’ Attributes Cure or Minimize Income Smoothing by Management? Nigerian Journal of Management Sciences, 24(2a), 109-123. Amahalu, N. N., Okeke, M. N., Obi, J. C. (2017). Audit quality determinants: evidence from quoted healthcare firms in Nigeria. International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(4), 216-231. http://dx.doi.org/10.6007/IJARAFMS/v7-i4/3540. Amahalu, N.N. & Obi, J.C. (2020). Effect of audit quality on financial performance of quoted conglomerates in Nigeria. International Journal of Management Studies and Social Science Research, 2(4), 87-98. Amahalu, N.N., & Ezechukwu, B.O. (2017). Determinants of audit quality: Evidence from deposit money banks listed on Nigeria Stock Exchange. International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(2), 117-130. Awad, G., and Ghanem, M. G. (2023). Board of Directors, audit committee and firms’ performance. Dutch Journal of Finance and Management, 6(1), 20594. https://doi.org/10.55267/djfm/13463 Ayinla, R.B., Aliyu, N.S., & Abdullah, A.A. (2022). Audit attributes and the financial reporting quality of listed deposit money banks in Nigeria. Accounting and Taxation Review, 6(2): 31-46. http://hdl.handle.net/11159/12658. Bako, P. M. (2024). Audit committee attributes, audit quality and performance of oil and gas companies. International Journal of Financial, Accounting, and Management, 5(4), 511- 522. Bawuah, I. (2024) Audit committee effectiveness, audit quality and earnings management: evidence from Ghana. Cogent Business & Management, 11 (1), 1-23. https://doi.org/10.1080/23311975.2024.2315318. Cheng, Y.S., Chen, Y.S., & Chen, Y.C. (2018). Direct and mediating effects of auditor quality on auditor size and performance. International Business Research, 6(11), 134-148. Eniola, O. J. & Adebiyi, I. M. (2023). Attributes of Audit Committee on the Financial Performance of Nigerian Firms. American International Journal of Business Management , 6(12), 1-15. Eyamu, F. O., Oliogu, E. O. and Eyamu, E. O. (2024). Debt-equity financing and institutional quality of boards of public listed oil and gas firms in Nigeria. International Journal of Academic Management Science Research, 8(11), 1-10. Ezeabasili, V. N. & Erhijakpor, A. E. O. (2017). Effect of the determinants of capital structure on bank growth and performance in Nigeria. AAU Journal of Management Sciences, 8 (1&2), 24-42. Hardin, J. W. & Hilbe, J. M. (2018). Generalized linear models and extensions (4th edition). Stata Press. JAFM Jensen, M. C. & Meckling, W. H. (1976). Theory of firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. http://dx.doi.org/10.1016/0304-405x(76)90026-x Mbatuegwu C. D. P., Akpan, F. F. & Ngerebo-a, T. A. (2023). Effect of audit regulations on audit quality in Nigerian oil and gas companies. Iosr Journal of Economics and Finance (Iosr- Jef), 14(6), 22-36. Muhammed, I. K., Abdulyakeen, G., Ajide, K. T. & Oyaleke, K. O. (2024). Audit committee’s attributes and quality of financial reporting on listed consumer goods firms in Nigeria. Malete Journal of Accounting and Finance, 4(2), 209-224. https://majaf.com.ng/index.php/majaf/index. Nwoye, C. M, Anichebe, A. S. & Osegbue, I. F. (2021). Effect of Audit Quality on Earnings Management in Insurance Companies in Nigeria. Athens Journal of Business & Economics, 7(2), 173-202. https://doi.org/10.30958/ajbe.7-2-4 Obeitoh, O.O., Samaila, I. A., Kantudu, A.S. (2024). The moderating role of audit committee expertise on the relationship between board attributes and earnings quality. FUDMA Journal of Accounting and Finance Research , 2(1), 147-165. Okeke P. C. (2021). Audit committee attributes and corporate performance: evidence from selected manufacturing firms in Nigeria. European Journal of Accounting, Auditing and Finance Research, 9(9), 1-17. https://doi.org/10.37745/ejaafr.2013. Okoughenu, S. A. & Odunsi, O. T. (2023). Audit quality and earnings quality reporting of Nigerian listed oil and gas companies: the moderating influence of audit committee. The Journal Contemporary Economy Revista Economia Contemporană, 8(4), 65-75. Oladejo M.O., Akintunde, A. O., Yinus, S.O., Akanbi, T. A. & Olowokere, J. K. (2021). Impact of corporate board and external audit attributes on earnings quality: Experience from Nigeria quoted foods and beverages firms. World Journal of Advanced Research and Reviews, 12(3), 612–623. https://doi.org/10.30574/wjarr.2021.12.3.0730. Olagunju, A., Oluwakayode, E. F., Adenle, O. E. & Bamigboye, O. A. (2024). Influence of audit firm attributes on earnings management and audit quality of listed Nigeria manufacturing firms. Economics and Business, 38, 34–53. https://doi.org/10.7250/eb-2024-0003. Ombugu, T.T. & Udeh, F.N. (2023). Audit committee and earnings management of listed industrial goods firms in Nigeria, Journal of Global Accounting, 9(4), 241 - 257. Orbunde, B., Oyewobi, I. and Musa, U.F., (2021). Effect of audit quality on earnings management of listed oil and gas marketing companies in Nigeria. Bingham University Journal of Accounting and Business , pp.58-73. Orjinta, H. I. & Abazu, M. (2023). Audit Firm Attributes and Earnings Quality: Evidence from Industrial Goods Firms in Nigeria. International Journal of Business & Entrepreneurship Research, 14(6), 84 – 104. Ozegbe, K. K. & Jeroh, E. (2022). Audit Quality and the Financial Performance of Quoted Companies in Nigeria: Empirical Discourse. ACTA UNIVERSITATIS DANUBIUS ŒCONOMICA, 18(5), 182-197. Rijal, S., Bakri, A. A. & Arjang, N (2023). Effect of Auditor Specialization, auditor characteristics, board independence on audit quality through intellectual capital: study on service companies. The ES Accounting and Finance, 1(2), 95-103. Ripiye, W. B., Ugoh, T. T. & Rikwentishe, R. (2021). Effect of Auditor Attributes on Real Earnings Management of Quoted Food and Beverages Companies in Nigeria. Jalingo Journal of Social and Management Sciences, 3(3), 160-173. JAFM Sayyar, H., Basiruddin, R., Abdul-Rasid, S.Z., & Elhabib, M.A. (2018).The effect of audit quality on firm performance: Evidence from Malaysia. European Accounting Review. 16(4),72- 88. Shamsuddin, A. B. & Alshahri, G. M. (2022). The Effect of Audit Committee Characteristics on Firm Performance: Evidence from Non-Financial Sectors in Oman. Asian Economic and Financial Review, 12 (9), 816-836. Shuaibu, S., & Mohammed, A. M. (2023). The effect of earnings management on shareholders' wealth maximization from the perspective of Money Deposit Banks in Nigeria. Recent Trends in Data Mining and Business Forecasting, 4(1), 43-49. Soyemi, K. A., Olufemi, O. A., & Adeyemi, S. B. (2020). External audit (or) quality and accrual earnings management: Further evidence from Nigeria. Malaysian management journal, 24, 31- 56. Soyemi, K. A., Tiamiyu, M. A. & Omale, O. E. (2023). Audit quality attributes and financial performance nexus: further evidence from Nigeria. Proceedings of the 7th Annual International Academic Conference on Accounting and Finance Disruptive Technology: Accounting Practices, Financial and Sustainability Reporting. Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355-374. https://doi.org/2307/1882010 Tyokoso, G. M., & Tsegba, I. N. (2015). Audit quality and earnings management of quoted oil marketing companies in Nigeria. European Journal of Business and Management, 7(29), 34-42. Tyokoso, G. M., Sabari, M. H., Dogarawa, A. B., Ibrahim, H. (2016). Effect of audit quality on earnings management of listed oil marketing companies in Nigeria. Nigerian Journal of Accounting Research, 12(1), 65-96. Umoru, E. O., Oziegbe, D. J. & Bekweri, E. M. (2024). Audit committee attributes and financial performance of listed oil and gas firms in Nigeria. UMYU Journal of Accounting and Finance Research, 6(1), 120-139. https://doi.org/10.61143/umyu-jafr.6(1)2024.010.

Audit Attributes and Earnings Quality of Quoted Oil and Gas Firms in Nigeria

Abstract

Keywords

References

More Articles from JOURNAL OF ACCOUNTING AND FINANCIAL MANAGEMENT