Moderating Effect of Audit Report Lag on the Relationship Between Audit Market Structure and Financial Reporting Quality of Listed Deposit Money Banks in Nigeria

Abstract

The study examined the moderating effect of Audit Report Lag (ARL) on the association between Audit Market Structure (AMS) and Financial Reporting Quality (FRQ) of Nigerian banks. The specific objectives are to examine the effect of ARL on FRQ among Nigerian banks and assess the moderating influence of ARL on the association between audit market structure (AMS) and FRQ among Nigerian banks. A longitudinal research design was employed, using secondary data from the audited annual accounts of selected banks. The population comprised 14 publicly quoted Deposit Money Banks (DMBs) in Nigeria, from which a sample size of 11 DMBs was obtained using purposive sampling technique. Multiple regression was used to analyse the data, revealing that ARL has a significant effect on the FRQ of Nigerian banks (t-value = 2.4928; p < 0.05). This suggests that delays in the audit process can allow auditors more time to thoroughly review and analyse financial statements, potentially leading to higher-quality audits. Additionally, the study identified that ARL has an inverse and substantial moderating effect on the association between AMS and FRQ (t-value = -1.9252; p < 0.05). The policy implication of this finding is that delays in the issuance of audit reports may weaken the overall quality of financial reporting among Nigerian banks.