Audit Quality in the Nigerian-banking Sector: Implications of the 2006 Code of Corporate Governance for Banks in Nigeria.


Corporate governance encompasses the legal and regulatory framework governing the actions of firms, organizations, institutions, their internal policies and controls established by the institutions themselves. The objective of corporate governance is to ensure that the board and management act in the best interest of all stakeholders.

This study aimed at determining the influence of audit quality in Access bank, Diamond bank, Ecobank, First bank, FCMB, GTB, Skybank, Stanbic Bank, Union Bank, United Bank for Africa and Zenith Bank with reference to 2006 code of corporate governance. The study made use of ex-post facto research design.

A sample of eleven banks were selected from a population of 22 banks quoted on the Nigerian Stock Exchange using judgmental sampling technique. Data was collected through secondary source from published annual financial reports (2007 – 2014), which was analysed using the Standard Ordinary Least Squared Regression Model.

It was recommended that Proponents of large board size believe it provides an increased pool of expertise because larger boards are likely to have more knowledge and skills at their disposal, also are capable of reducing the dominance of an overbearing CEO, and hence put the necessary checks and balances. 


The financial distress, which has affected most of the Nigerian banks prior to the 2004/2005 bank consolidation exercise, has pushed up the demand for high quality corporate governance. Adeyemi (2006) pointed out that the need for a strong, reliable, and viable banking system is underscored by the fact that the industry is one of the few sectors in which the shareholders fund is only a small proportion of the liabilities of an enterprise.

It is, therefore, not surprising that the banking sector is one of the most regulated sectors in any economy as is the case in Nigeria. Banking reforms have been an ongoing phenomenon around the world right from the 1980s, but it was more intensified in recent time because of the impact of globalization, which is precipitated by continuous integration of the world market and economies (Adegbagu & Olokoye 2008).

Banking reforms involve several elements that are unique to each country based on historical, economic, and institutional imperatives. In Nigeria, the reforms in the banking sector preceded against the backdrop of banking crisis due to highly undercapitalization of deposit taking banks; weakness in the regulatory and supervisory framework; weak management practices; and the tolerance of deficiencies in the corporate governance behaviour of banks (Uchendu 2005).

Banking sector reforms and recapitalization have resulted from deliberate policy response to correct perceived or impending banking sector crisis and subsequent failures. A banking crisis can be triggered by weakness in banking system characterized by persistent illiquidity, insolvency, undercapitalization, high level of non-performing loans and weak corporate governance, among others. 


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StudentsandScholarship Team.

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