Audit Quality Control and Financial Performance of Deposit Money Banks in Nigeria

Abstract

This study examines the impact of audit quality control on financial performance of listed Deposit Money Banks (DMBs) in Nigeria. The study period is 2014-2024 (11 years) to address reviewer concerns, using a balanced panel of 14 banks listed on NGX as at 31st December 2024, yielding 154 firm-year observations (14×11). Audit quality control is operationalized as audit committee effectiveness attributes per CBN Code of Corporate Governance 2014: Audit Committee Size (ACS), Independence (ACI), Gender Diversity (ACD), and Meeting Frequency (ACM), which serve as internal monitoring proxies to ensure external audit effectiveness. Firm Growth (asset growth) is main dependent, with ROA, ROE and Tobin's Q as alternative measures for robustness tests. Panel Fixed Effects with robust clustered standard errors is used after Hausman test (Chi2=23.84, p=0.0012). To address endogeneity and reverse causality, lagged independent variables and System GMM are employed as additional checks. Findings: ACI and ACM positive significant and robust across all performance measures, ACS and ACD positive insignificant. Results support agency and resource dependence theories and have implications for CBN Code 2014 and NCCG 2018 enforcement.