The Impact of Board Power on Audit Quality in Nigeria

This study investigates the impact of board power on audit quality in 150 Nigerian publicly traded companies, motivated by growing concerns over the influence of corporate boards on financial oversight and the credibility of financial reporting. Despite regulatory efforts to strengthen corporate governance in Nigeria, the effectiveness of board structures in enhancing audit quality remains unclear. The primary objective of this research is to examine whether varying degrees of board power, measured through board independence, board size, and the presence of women directors, affect the quality of external audits. Using a panel dataset of 150 firms listed on the Nigerian Exchange Group (NGX) from 2014 to 2023, the study employs a quantitative approach anchored in agency theory and applies a random effects regression model to test the hypotheses. Audit quality is proxied by audit firm size (Big 4 vs. non-Big 4). The findings reveal that board power, firm profitability, and firm size have a statistically significant positive effect on audit quality. In contrast, firm leverage shows a significant negative relationship. These results suggest that powerful boards, when structured appropriately, can enhance audit oversight and improve the credibility of financial reporting. The study is limited by its reliance on secondary data and its exclusion of financial institutions, which are governed by different regulatory frameworks. Nonetheless, it provides practical implications for regulators, corporate boards, and investors, highlighting the importance of board composition in ensuring audit integrity. The originality of this research lies in its contextual focus on an emerging economy with weak institutional frameworks, offering nuanced insights into how internal governance mechanisms influence external audit outcomes.