Determinants of Auditor Switching on Quoted Deposit Money Banks in Nigeria

Abstract

The study investigated the determinants of auditor switching on Quoted Deposit Money Banks (DMBs) in Nigeria from 2012 to 2018. Ex-post facto research design was adopted to examine the factors that influence auditor switching. Out of the 14 deposit money banks listed on the floor of the Nigeria Stock Exchange (NSE) as at 31st December, 2017, a sample size of 12 quoted deposit money banks were selected through stratified sampling technique. Data were collected from the annual reports and accounts of the selected banks and the modified Jones model was used to estimate the discretionary accruals which were deployed as a measurement of earnings management. Logistic regression analysis was used to estimate the determinants of auditor switching. STATA 15 statistical software was deployed to conduct the regression analysis. The results of the study indicated an inverse but a significant relationship between audit fees and auditor switching while a positive and significant relationship was also established to exist between the size of banks and auditor switching. However, there was no any significant relationship between bank's leverage and auditor switching. The study concluded that Small-sized banks did switch their auditors within 3 years during the period of this study but large-sized banks maintained the same set of auditors for a relatively longer period of time spanning 3 years and beyond and recommended among others, that listed banks should pay audit fees commensurate to the quality of professional services to be provided by their auditors as doing so could afford them the opportunity of benefiting from quality audit services that would enhance the quality of their auditor switching and also promote stability/longer tenure between them and their clients.