EFFECT OF AUDIT TENURE ON RETURN ON EQUITY OF SELECTED NIGERIAN DEPOSIT MONEY BANKS

Abstract

Auditing, as a vital component of corporate governance, serves as a mechanism to ensure the integrity of financial reporting and the overall health of financial institutions. However, credibility and overall quality of accounting information which is expected to ensure progressive financial performance cannot be attained unless the auditors maintains some level of independence. The study therefore examined the effect of audit tenure on return on equity of selected Nigerian Deposit Money Banks. The study employed ex-post facto research design wherein secondary data sourced from published annual report and accounts of listed DMBs, over a ten (10) year period of 2015 to 2024. Data employed include Audit Fees (AudFees), Audit Tenure (AT) Status of Audit Firm (SAF) and Audit Committee Diligence (AuDil) which was related Return on Equity (ROE). Fourteen (14) Deposit Money Banks listed on the Exchange constitute the population of the study as at December, 2024 from where sample sizes of 10 DMBs were selected using purposive sampling technique. Panel regression analysis was adopted to examine the effect of audit tenure on return on equity. Findings from the result of panel regression analysis on the effect of AudFees on ROA showed that two (2) out of the six (6) explanatory variables were significant in explanatory the variation of return on equity. These variables are AF (p=0.000) and SAF (p=0.0900). The study concluded that audit tenure influence the return on equity of selected Nigerian Deposit Money Banks. Bank executives should consider hiring highly reputable audit firms, especially those with industry-specific experience and international affiliations, as the status of the audit firm was found to have a significant relationship with Return on Equity (ROE).