Audit Quality and Earnings Per Share of Listed Insurance Companies in Nigeria

ABSTRACT: Financial performance is influenced by audit quality, which is essential for ensuring the accuracy and reliability of financial reports that is imperative for stakeholders' decision-making and corporate transparency. In the context of Nigeria's insurance sector, financial performance, particularly Earnings Per Share (EPS), has become a key measure of success. This study investigates the effect of audit quality on EPS in listed insurance companies, focusing on three primary components: audit fees, auditor independence, and audit firm size. The study adopts an ex-post facto research design, analyzing data from 22 listed insurance firms over a five-year period (2017-2021). Descriptive statistics, unit root tests, and multiple regression analysis were employed. Results from the unit root test confirm that all variables are stationary, allowing for time-series analysis. The findings show that audit fees have a significant positive impact on EPS (β = 5.61, p < 0.05; F = 5.10, p < 0.05), while auditor independence exhibits a negative but significant effect on EPS (β = -3.30, p < 0.05; F = 5.39, p < 0.05). Additionally, audit firm size positively influences EPS (β = 0.36, p < 0.05; F = 1.13, p < 0.05). The model’s reliability is supported by Durbin-Watson statistics close to 2, indicating minimal autocorrelation. These findings underscore the importance of audit quality in shaping the financial performance of insurance companies in Nigeria, providing valuable insights for auditors, regulators, and stakeholders aiming to enhance financial transparency and performance.