OPTIMIZING AUDIT TENURE THROUGH EFFECTIVE BOARD GOVERNANCE: EVIDENCE FROM LISTED NIGERIAN FIRMS
Abstract
This study examined the impact of board governance characteristics on audit tenure among listed Nigerian firms. Specifically, it investigates how board, audit and firm characteristics influence the duration of auditor engagement. The study used descriptive statistics, and a random-effects generalised least squares (GLS) regression model on 33 nonfinancial firms within a ten-year period (2014-2023) in Nigeria to analyse its data. The results reveal that the Wald chi2 statistic of 21.40, with a p-value of 0.0032, demonstrates that the independent variables collectively have a statistically significant effect on AUDT. When analysed individually, the analysis reveals that AUDS has a significant negative relationship with audit tenure, indicating that larger audit committees are associated with shorter audit tenures. This suggests that larger audit committees may enhance oversight functions, prefer periodic auditor rotation to maintain independence and ensure high audit quality. In contrast, other governance variables, such as BSIZ, BMET frequency, BODI, and BREM, do not have statistically significant effects on AUDT. The findings highlight the crucial role audit committees play in optimising audit tenure and enhancing corporate governance practices. The study recommends strengthening audit committees, adopting and enforcing regular auditor rotation policies, and enhancing board governance practices to improve auditor independence and the overall quality of financial reporting. These recommendations should aim to promote transparency and effectiveness in corporate governance within Nigerian listed firms.
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Published in UNIPORT JOURNAL OF BUSINESS, ACCOUNTING & FINANCE MANAGEMENT
ISSN: 1596-9911
This article appears in our peer-reviewed academic journal
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