Audit Quality and Financial Statement Reliability in Nigerian Listed Companies

Audit quality is a cornerstone of financial statement reliability, as it determines whether external stakeholders can depend on reported figures for investment, credit, and regulatory decisions. This study examines the relationship between audit quality indicators and the reliability of financial statements among companies listed on the Nigerian Exchange Group. Audit quality is proxied by auditor type, specifically Big-Four versus non-Big-Four affiliation, audit tenure, and audit fees, while financial statement reliability is measured through accrual quality scores and restatement frequency. Secondary data are compiled from annual reports and auditor disclosures of 50 listed firms across three sectors for the period 2019 to 2023. Panel data regression analysis is applied, with appropriate controls for firm size, leverage, and industry classification. The study is anchored on agency theory and the informational role of auditing in reducing information asymmetry between management and external stakeholders. The research engages with the Financial Reporting Council of Nigeria's auditor rotation requirements and their anticipated effect on audit independence. Existing literature from Nigeria and other African markets generally confirms that Big-Four audited firms exhibit lower earnings management and higher disclosure quality, though audit fee levels introduce a potential independence threat that complicates the picture. This study contributes Nigerian-specific evidence on audit quality determinants and their financial reporting outcomes, with implications for the Financial Reporting Council of Nigeria, the Institute of Chartered Accountants of Nigeria, and investors applying auditor quality as a screening criterion. Keywords: audit quality, financial statements, earnings management, Nigerian Exchange Group, auditor independence