Original Research Article | OPEN ACCESS
Auditor’s Independence and Audit Quality: An Empirical Study

For correspondence:-    

Received: 14 April 2018        Accepted: 25 May 2018        Published: 30 June 2018

Citation: Auditor’s Independence and Audit Quality: An Empirical Study. Account Tax Rev 2003; 2(2):15-27 doi:

© 2003 The authors.
This is an Open Access article that uses a funding model which does not charge readers or their institutions for access and distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0) and the Budapest Open Access Initiative (http://www.budapestopenaccessinitiative.org/read), which permit unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited..

Abstract

The study examines the effect of auditor’s independence on audit quality of listed oil and gas companies in Nigeria over a period of ten (10) years (from 2007 to 2016). The sample size comprises of nine (9) out of the fourteen (14) companies listed in the downstream sector of the Nigeria Stock Exchange selected using purposive sampling technique. The study uses secondary data which were sourced from the audited annual financial statements of the sampled companies. The panel data were analyzed using descriptive statistics, correlation matrix and binary logit regression technique. The findings show that there is a significant positive relationship between auditor’s independence and audit quality, while the control variable of company size and leverage showed positive and negative relationship with audit quality respectively. The study recommends that the entire components of audit fees pricing and calculation should be regulated and disclosed in order to provide public insight into the financial dependence of an auditor on a client and whether the fee corresponds with the complexity of the audit assignment.

Keywords: Auditor’s independence, audit quality, financial statement, matrix andbinary regression.


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