Audit Tenure, Audit Fees and Firm Performance: A Robust Null Result from Nigeria’s Non-Financial Listed Sector, 2015–2024

It remains unsettled whether the length of an auditor’s tenure and the fees an auditor charges affect the financial performance of firms, and evidence from Nigeria is limited, dated or confined to a single sector. This study therefore examined whether audit tenure and audit fees were associated with the financial performance of listed non-financial firms in Nigeria over 2015 to 2024, and then extended the analysis into a dynamic framework to address possible endogeneity between audit fees and performance. The study used a balanced panel of 800 firmyear observations from 80 firms across ten sectors. Four performance measures (return on assets, return on equity, earnings per share and Tobin’s Q) were first estimated against audit tenure, log audit fees and firm size using random effects with firm-clustered standard errors, and then using two-step difference generalised method of moments. Hausman tests favoured random effects throughout, and neither audit characteristic predicted performance at the 5% level in the static models. The dynamic models gave clearer results. Once the persistence of past performance was taken into account, audit fees carried a significant negative association with earnings per share (p = 0.02) and a marginal negative association with return on assets (p = 0.05), associations the static model did not detect. A companion fee equation found no significant support for lagged performance predicting current fees in three of four models. Hansen and second-order autocorrelation tests supported both sets of estimates. Interpreted through agency and institutional theory, the findings indicated that audit fees had a modest link with performance that the static model concealed, and offered little support for reverse causality from performance to fees. The study contributed transparent evidence, which addresses endogeneity, from an under-examined Sub-Saharan African audit market.