Auditor Switch Decisions and Corporate Performance of Listed Non-Finance Firms in Sub-Saharan Africa

Abstract

This study examined the effect of auditor switch decisions on corporate performance of nonfinance companies in sub-Saharan Africa. Ex-post facto research design was employed and secondary data of big-4 audit and non-big-4 audit, audit fee, return on assets, and return on equity were obtained from the annual reports and accounts during the period 2012-2019 for three sub-Saharan Africa countries – namely Nigeria (West), Kenya (East) and South Africa (Southern). Data obtained were analysed via descriptive results (mean, median, minimum and maximum values, standard deviation, kurtosis and skewness); pre-estimation test (correlation matrix); and post-estimation tests (Variance Inflation Factor (VIF), fixed and random effects regression). The VIF result showed that the empirical model of auditor switch decisions and corporate performance in sub-Saharan Africa is without bias and can be relied upon. Interestingly, the study found that return on equity and return on assets were insignificantly affected by auditor switch decisions. The study thus recommended among others that since auditor switch decisions do not impair return on equity and assets; hence, government and regulatory framework of accounting need to take necessary measures to restrain quoted companies’ arbitrariness in auditor switch and its impairment to return on equity and assets.