Pages: (195-201 )
Abstract
Global corporate scandals of some world class corporations, whose financial statements were hitherto certified to be true and fair by big firms of external auditors, eroded stakeholders’ confidence. However, the choice of audit firm is essential in confirming financial clarity and boosting investor confidence. Given the importance of audit firm attributes in assuring financial credibility, this study aims to examine the relationship between on audit firm attributes and choice of audit firms in Nigerian manufacturing sector. The study involves analysing a panel data set of 35 quoted manufacturing firms spanning 2012-2023. Discroll-Kraay standard error (DKSE), feasible generalized least squares (FGLS) and panel-corrected standard errors (PCSE) are used in data analysis. The empirical results reveal that audit firm attributes, such as audit firm size, audit resource availability, and audit industry specialization, stimulates the choice of audit firm among selected firms in Nigeria. Audit firm tenure exerts an insignificant negative effect on the choice of audit firm in Nigeria, indicating that it is not a significant determinant of choice of audit firm. Thus, Nigerian companies should give precedence to audit firm size, audit firm industry specialization and audit firm resources availability rather than audit firm tenure, when choosing a firm of external auditors, to ensure financial reporting integrity, capable of preventing company collapse.
Keywords: choice of audit firm, audit firm size, resource availability, industry specialisation, financial performance.,