Audit quality and financial performance of deposit money banks in Nigeria

Abstract

This paper examines the relationship between audit quality and the financial performance of deposit money banks in Nigeria over the period 2014–2024. Audit quality is proxied by audit committee size, audit fees, and audit committee independence. Using secondary data drawn from audited annual reports of selected banks and applying panel fixed-effects regression with robust standard errors, the study finds that audit committee size is statistically insignificant for return on equity (ROE), audit fees are negatively associated with ROE, and audit committee independence is positively associated with ROE. The results suggest that while higher audit spending is associated with lower accounting returns, stronger independent oversight improves performance. Policy recommendations include strengthening audit committee independence, managing audit-related costs through process efficiency, and broadening future research to include additional audit-quality measures and macroeconomic controls.