EFFECT OF AUDITORS ROTATION ON THE PERFORMANCE OF BANKS IN NIGERIA; (STUDY OF GUARANTEE TRUST BANK PLC, ZENITH BANK PLC. & FIRST BANK PLC)

T. N. Ofor (PhD), Ifeanyi Omziri

Abstract


This study assessed the effect of auditors rotation on the performance of banks in Nigeria; a study of Guaranteed Trust Bank (GTB), Zenith Bank Nigeria PLC and First Bank Nigeria PLC, from 2001-2020. Specifically, this study examined the effect of auditor’s tenure on the performance of Guaranteed Trust Bank (GTB), Zenith Bank Nigeria PLC and First Bank Nigeria PLC, in Nigeria. Multiple regression analysis and ex-post facto research design were utilized to test the hypotheses of this study. Based on the analysis conducted this present study concludes that audit tenure has a positive and insignificant effect on the performance of Guarantee Trust Bank (GTB) PLC in Nigeria. While audit fees has a positive and significant effect on the performance of Guarantee Trust Bank (GTB) PLC in Nigeria; Audit tenure has negative insignificant effect on the performance of Zenith Bank PLC in Nigeria; Audit fee has positive significant effect on the performance of Zenith Bank PLC in Nigeria; Audit tenure has negative insignificant effect on the performance of First Bank of Nigeria PLC; Audit fee has positive insignificant effect on the performance of First Bank of Nigeria PLC. The above results are based of 5% level of significance. It was recommended that, banks, should always employ the services of one of the big audit firms since it results to improved audit quality; and auditors firm relationship with the bank should exceed 3 years, by so doing the auditor may develop good strategies of improving the financial quality of the bank.


Keywords


Mandatory Auditors Rotation, Auditors Tenure, Auditors Fees, Bank Performance

Full Text:

PDF

References


Adeyemi, S. B., & Okpala, 0. (2011). The impact of audit independence on financial

reporting: Evidence From Nigeria. Business and Management Review, 1(4), 09-25.

Akanni, B.M, Olabisi, A.L, & Olawale, A.I, (2021), Audit Quality And Performance Of

Banks In Nigeria: 2012 – 2019, Journal of Accounting Information and Innovation Vol.7, No.7, July-2021; ISSN (4243 – 406X); p –ISSN 3467 – 7038

Amahalu, N.N., Okeke, M.N., & Obi, J.C. (2017). Audit quality determinants: Evidence from

quoted health care firms in Nigeria. International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(4), 216-231.

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, IJMSSSR 2020 Volume 2 Issue 4 July – August ISSN: 2582 - 0265

Asien, A., (2007). Mandatory rotation of external auditors. The Nigerian Accountant, pp.20–

Baron, M. (2002). Analysis of the Mandatory Auditor Rotation Debate. Tennessee.

Berle, Adolf A. and Gardiner C. Means (1932). The Modern Corporation and Private Property. New York, Macmillan Publishing Co.

Carrera, N. et al.( 2007). Mandatory audit firm rotation in Spain : A policy that was never applied. Accounting, Auditing and Accountability Journal, Vol. 20 No 5,, 20(5), pp.671–701.

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.

DeFond, M. L.&Francis, J. R., (2005). Audit research after sarbanes-oxley. Auditing: A Journal of Practice & Theory, 24, 5-30.

Eneisik, G.E & Akani, F.N (2021), “Audit Quality and Market Value of Quoted Banks in

Nigeria” International Journal of Innovative Finance and Economics Research 9(4):18-41, Oct.-Dec., 2021

EU, (2011). European Commission Brussels, 4 February 2011 S, Brussels.

Jenkins, D. S., & Velury, U. (2008). Does auditor tenure influence the reporting of

conservative earnings?Journal of Accounting and Public Policy 27(2), 115–132.

Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behaviour, agency costs

and ownership structure. Journal of Finance and Economics, 3, 305-360.

Liu, S.H. (2017). An empirical study: auditors’ characteristics and audit fee. Open Journal of

Accounting, 6, 52-70.

Mahdi, S, Grzegorz, Z, Hossein, T.I, & Javad, G. (2022). The Effect of Mandatory Audit

Firm Rotation on Earnings Management and Audit Fees: Evidence from Iran. Journal of Risk and Financial Management 2022, 15, 102

Nworji, I.D., Adebayo, O. & David, A.O. (2011). Corporate governance and bank failure in

Nigeria: Issues, challenges and opportunities. Research Journal of Finance and Accounting, 2(2), pp.27–44.

Oscar, C. et al., (2012). Audit partner tenure and audit quality : An empirical analysis. European Journal of Business and Management, 4(7), pp.154–163.

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.

Türel, A., Taş, N., Genç, M., & Özden, B. (2017). Audit firm tenure and audit quality implied by discretionary accruals and modified opinions: Evidence from Turkey. Acta Universitatis Danubius. OEconomica, 13(1), 1-11.

Welch, I., 2011. Audit under fire : A review of the post-financial crisis inquiries, London.


Refbacks

  • There are currently no refbacks.


 

 

 

 

   

 

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.