EXTERNAL AUDITORS' ATTRIBUTES AND INCOME SMOOTHING AMONG LISTED NON-FINANCIAL FIRMS IN NIGERIA

This study investigated the degree of influence of external auditors’ attributes on income smoothing among listed non-financial firms in Nigeria from 2011 to 2020.  The research design adopted for the study was the ex-post facto research design because the data used for the study were already in existence and therefore the researcher had no control over the data set of the study.  Hence, the sources of data were secondary sources taken from audited annual reports and accounts of the related non-financial firms as listed on the Nigerian Stock Exchange Fact Book.  Using the filtering sampling technique, the study used a sample of seventy-five (75) non-listed firms drawn from ten (10) Nigerian non-financial sectors including agriculture, conglomerate, consumer goods, construction and real estate, healthcare, information and communication technology, oil and gas, industrial goods, natural resources and services.  Data were extracted from the annual reports and accounts of these firms and were analyzed with the aid of binary logistic regression usingthe analytical software of Stata version 16 and Microsoft excel. From the marginal effect model, the variables of audit opinion (Coef. = 0.448; p-value = 0.000) and audit delay (Coef. = 0.000; p-value = 0.050) respectively have significant positive effects on Small Positive Income of listed non-financial firms in Nigeria.    Audit fees (Coef. = -0.098; p-value = 0.002) has significant negative effect on Small Positive Income. Lastly, the variable of audit firm size (Coef. = -0.034; p-value = 0.351) has an insignificant effect on Small Positive Income of listed non-financial firms in Nigeria. Non-financial sectors are extremely crucial for the economic growth of a developing economy such as Nigeria. The study therefore concluded that the external auditors’ attributes of interest in this study significantly determine whether or not managers of non-listed financial firms in Nigeria will engage in income smoothing.  In general, it was revealed that managers of listed non-financial firms in Nigeria do practice earnings smoothing.  It seems clear that except for the variable of audit firm type, all other variables of interest do significantly (positively or negatively) determine the likelihood of income smoothing among listed non-financial firms in Nigeria.  It is therefore recommended that policymakers and managers of listed non-financial firms in Nigeria should continue to develop stronger internal control policies to checkmate accounting and bookkeeping errors which in turn should reduce the extent of substantive tests by external auditors to avoid detrimental and costly external audit delays.