MODERATING EFFECT OF PROFITABILITY ON BOARD ATTRIBUTES AND AUDIT QUALITY OF FINANCIAL FIRMS IN NIGERIA

Abstract

The reliability of accounting information, is largely determined by the quality of financial statement audits, is vital to its users. The board of directors, entrusted with safeguarding shareholders’ interests, holds the legal responsibility to oversee management and ensure the integrity of audit processes. Against this backdrop, this study examines the influence of corporate governance attributes on the audit quality of listed financial firms in Nigeria between 2015 and 2024. Specifically, it investigates the effects of board size, board independence, and board gender diversity, as well as the moderating role of profitability, on audit quality. Using a purposive sample of 43 firms and employing a two-model framework with panel regression techniques, findings from Model I reveal that board size, board independence, and board gender diversity each exert a significant positive impact on audit quality. Conversely, Model II results show that profitability negatively moderates the relationships between board size, board independence, and audit quality, but positively moderates the relationship between board gender diversity and audit quality.Showing that profitability is key to audit quality but not in situations. The study therefore recommends that Nigerian financial firms maintain relatively larger boards, increase the proportion of independent non-executive directors, and promote greater gender diversity to enhance audit quality.