Does external auditor rotation affect financial statement comparability, and what are the implications for investors and regulators?
Year: 2026
Type: article
Abstract: This study examines the effect of External Auditor Rotation (EAR) on Financial Statement Comparability (FSC) among 152 publicly listed Nigerian firms over 2015–2024, controlling for firm size (FS), industry type (INDT), and firm leverage (FL). Descriptive statistics indicate moderate comparability, with larger firms and manufacturing firms exhibiting higher FSC, while highly leveraged firms show lower comparability. Correlation analysis reveals significant positive associations between FSC and EAR (0.18*), FS (0.32*), and INDT (0.12*), and a negative association with FL (-0.21*). Fixed-effects regression confirms that EAR (0.038*), FS (0.054*), and INDT (0.021*) positively influence FSC, while FL (-0.029*) negatively affects comparability, supporting the role of auditor independence, firm scale, and industry characteristics in promoting consistent reporting. The study highlights the importance of auditor rotation policies, strong governance, and leverage management in enhancing comparability, providing actionable insights for regulators, investors, and corporate boards.
Author: Yahaya, Onipe Adabenege
Institution: Nigerian Defence Academy
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7118530082
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