Audit Quality and Financial Performance: Evidence from Quoted Consumer Goods Companies in Nigeria

This study examined the effect of audit quality on the financial performance of listed consumer goods companies in Nigeria. Specifically, the study investigated the effects of audit committee size (ACS), audit firm size (AFS), audit committee expertise (ACE), and audit committee meetings (ACM) on financial performance, measured by net profit margin (NPM). The study adopted an ex-post facto research design and employed purposive sampling to select 16 companies from the population of 19 consumer goods companies listed on the Nigerian Exchange Group as at 2025. Secondary data were manually extracted from the audited annual reports and financial statements of the sampled companies for the period 2014–2024, producing 192 firm-year observations. Data were analysed using descriptive statistics, correlation analysis, multicollinearity and heteroskedasticity tests, Hausman specification test, and Panel-Corrected Standard Errors (PCSEs) regression. The findings revealed that audit committee size had a negative but statistically insignificant effect on NPM (β = −4.1836; p = 0.362). Audit firm size exerted a negative and statistically significant effect on NPM (β = −4.1837; p = 0.003), while audit committee expertise had a positive and statistically significant effect on NPM (β = 4.5967; p = 0.002). Audit committee meetings also had a negative and statistically significant effect on NPM (β = −1.2897; p = 0.006). Collectively, the audit quality variables significantly influenced financial performance, as indicated by an F-statistic of 10.98 and a p-value of 0.0268, while the model explained 17.68% of the variation in NPM. The study concludes that audit quality is an important factor influencing the financial performance of listed consumer goods companies in Nigeria, although its individual dimensions have different effects. The study recommends greater emphasis on the financial expertise and competence of audit committee members, careful selection of reputable and technically competent audit firms, and improvement in the effectiveness and quality of audit committee meetings rather than focusing solely on their frequency.

Audit Committee Size; Audit Firm Size; Audit Committee Expertise; Audit Committee Meetings; Financial Performance; Net Profit Margin; Listed Consumer Goods Companies.

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