INSTITUTIONAL OWNERSHIP STRUCTURE AND CHARACTERISTIC INFLUENCE ON AUDIT QUALITY OF NIGERIAN QUOTED MANUFACTURING COMPANIES

Abstract

The debate on whether outside monitoring tools such as institutional shareholders have imperative roles to play in engendering effective corporate governance practice in corporate entities is still ongoing. This study examined the impact of institutional ownership on audit quality. Secondary data used were analyzed using the sample size of 36 manufacturing firms listed on the Nigerian Stock Exchange from 2007 to 2017. Experimental research design was applied while multiple regressions were used for analysis. The study found that the coefficient of determination (R2) value of 0.164 means that the explanatory variables were responsible for 16.4% changes in auditors’ tenure. Institutional ownership has a negative and insignificant impact on auditors’ tenure (β = -0.339; p-value = 0.304). It is therefore concluded that institutional ownership has no significant influence on audit quality as measured by auditors’ tenure. The non-significance result of this study may be as a result of the peculiarity of Nigerian corporate ownership structure which is different from other developed and developing nations. Hence, the postulation of institutional ownership structure influencing audit quality may not always be valid. It is recommended that future research should focus on other measures of audit quality such as audit fees, audit size and audit committee independence; as these may reveal more convincing results.