An Evaluation of the Relationship Between Audit Transparency and Stakeholder Trust: A Study of Nigerian Public Companies
- Project Research
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Background of the Study
Audit transparency is a fundamental aspect of corporate governance that fosters trust among stakeholders, including shareholders, employees, regulators, and the general public. In Nigeria, public companies are required to disclose accurate and transparent financial information, which is subject to external audits (Oladeji & Durojaiye, 2023). However, the quality of audit transparency can vary, often influenced by factors such as auditor independence, regulatory frameworks, and company governance.
This study focuses on Nigerian public companies, examining the relationship between audit transparency and stakeholder trust. Companies listed on the Nigerian Stock Exchange, including prominent public firms, are of particular interest, as their audit reports have far-reaching implications for market behavior and public confidence. The study will explore how audit transparency contributes to or detracts from stakeholder trust, which is crucial for maintaining a healthy business environment in Nigeria.
Statement of the Problem
In many Nigerian public companies, audit transparency remains a significant concern due to factors such as insufficient regulatory enforcement, lack of auditor independence, and poor corporate governance practices (Abubakar & Musa, 2024). This results in a gap between stakeholders' expectations and the actual financial disclosures provided. This study seeks to evaluate the impact of audit transparency on stakeholder trust in Nigerian public companies, focusing on how transparent audits build or erode confidence.
Objectives of the Study
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To examine the relationship between audit transparency and stakeholder trust in Nigerian public companies.
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To evaluate how transparency in audit reports influences stakeholder perceptions and confidence.
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To assess the challenges faced by Nigerian public companies in achieving audit transparency.
Research Questions
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How does audit transparency affect stakeholder trust in Nigerian public companies?
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What role does the quality of audit reports play in influencing stakeholder perceptions of Nigerian public companies?
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What challenges do Nigerian public companies face in achieving transparency in audit reporting?
Research Hypotheses
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Audit transparency positively affects stakeholder trust in Nigerian public companies.
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The quality of audit reports is significantly related to stakeholder trust in Nigerian public companies.
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Challenges in regulatory compliance negatively affect audit transparency in Nigerian public companies.
Scope and Limitations of the Study
The study will focus on Nigerian public companies listed on the Nigerian Stock Exchange. The limitations include difficulties in accessing stakeholders’ perceptions due to confidentiality, and the complexity of isolating audit transparency as a single factor influencing stakeholder trust.
Definitions of Terms
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Audit Transparency: The degree to which an audit report clearly and comprehensively communicates a company’s financial position, risks, and governance practices.
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Stakeholder Trust: The confidence stakeholders place in a company’s ability to manage its affairs responsibly and transparently.
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Public Companies: Companies that are publicly traded on stock exchanges, with shares available for purchase by the general public.
