Revisiting Auditor Independence and Financial Performance: A Panel Data Study of Nigerian Banks

This study examines the impact of auditor independence on the financial performance of listed deposit money banks in Nigeria, with financial performance measured by Return on Assets (ROA). Using a panel data approach, the study analyzes the annual reports of 12 Nigerian banks from 2013 to 2023. The results show that non-audit fees and auditor rotation have negative but statistically non-significant effects on ROA, indicating limited influence on performance. Conversely, audit concentration has a positive and statistically significant impact on ROA, suggesting that higher audit concentration, linked to larger audit firms, enhances performance by fostering investor confidence and regulatory compliance. Auditor tenure has a positive but non-significant effect, highlighting that auditor tenure does not substantially affect performance. The study emphasizes the importance of audit concentration in the Nigerian banking sector and recommends that regulators focus on ensuring competitive audit markets while strengthening policies around non-audit fees and rotation to maintain auditor independence. These findings offer valuable insights for governance practices in emerging markets and inform policymakers on improving financial transparency and stability.