ANALYSIS OF AUDIT QUALITY AND INVESTORS PERCEPTION: THE CASE OF LISTED NON-FINANCIAL COMPANIES IN NIGERIA

Abstract

The study sets to examine the effect of audit quality on investors’ perception amongst listed non-financial companies in Nigeria. The study employed a purposive sampling technique to select 32 companies from a population of 107 listed non-financial companies in Nigeria as at 31^st December 2021. Secondary data were sourced from the annual reports of the companies from 2012 to 2021 (a period of 10 years). By way of utilizing the panel regression in testing the study hypotheses; the findings established that, audit tenure and audit rotation does not significantly affect investors perception measured through market share price of listed non-financial companies in Nigeria. On the other hand, audit firm size does significantly affect the investors’ perception amongst listed non-financial companies in Nigeria. Based on the conclusion, the study recommends that, the audit firms employed for audit services by Nigeria's listed non-financial companies should not be retained for more than ten years as this does not signal the right perception for investors about the company. In addition, the audit firms retained by the entities should be rotated on a five-year basis. This will strengthen the level of audit quality by avoiding overfamiliarity in the relationship between the audit firm and the company's management, which may impede audit independence and, as a result, cause investors to lose confidence in the audited reports of the companies when making market investment decisions