Impact of statutory audit and corporate taxation on profitability of selected listed companies in Nigeria

Figures & data

Figure 1. Diagrammatic representation of study objectives.

Table 1. Variable types and measurement

Variable Code	Variable meaning	Measurement	Source
FPF	Financial Performance of Firms	Measured with profit after tax and net assets of firms used in this study.	Published Audited Annual financial reports of firms under study.
PAT	Profit after Tax expenses	The figures are derived from firms’ statement of comprehensive income. It is the profit after tax expenses have been deducted.	Published Audited Annual financial reports of firms under study.
NTA	Net Assets	This figure is obtained from the statement of financial position of firms. It is the balance after all liabilities have been subtracted	Published Audited Annual financial reports of firms under study.
AUDF	Statutory audit fee	The audit fee is derived from the statement of comprehensive income under the professional and legal fees. It is the fee charged by external auditors for carrying out the statutory audit of firms.	Published Audited Annual financial reports of firms under study.
TEX	Tax expenses	Tax expenses includes corporate tax, and other tax liabilities firms are mandated to remit to the government.	Published Audited Annual financial reports of firms under study.
TAS	Total Assets	The assets comprise all property, plant and equipment of the selected firms	Published Audited Annual financial reports of firms under study.

Note: Source: Authors’ study information

Table 2. Descriptive Statistics results

Variables	Mean	Median	Max.	Min.	Std. Dev.	Skewness	Kurtosis	Jarque-Bera	No. of Obs.
PAT	22.08	21.82	26.90	17.81	2.288	0.373	2.429	2.20(0.33)	60
NTA	23.82	24.22	28.01	18.00	2.405	−0.214	2.579	0.90(0.64)	60
AUDF	17.16	17.25	19.70	14.51	1.222	1.782	2.878	0.73(0.69)	60
TEX	20.78	20.35	29.45	15.20	2.878	0.241	3.129	0.63(0.73)	60
TAS	24.44	24.36	27.14	21.13	1.782	−0.147	1.875	3.38(0.18)	60

Source: Research output, 2022.

Table 3. Correlation analysis

	PAT	NTA	AUDF	TAS	TEX
PAT	1.000
NTA	0.789***	1.000
AUDF	0.832***	0.883***	1.000
TAS	0.083	0.267	0.216	1.000
TEX	0.795***	0.807***	0.750***	0.174	1.000

Note: *** Significant level at 1% Research output, 2022

Table 4. Hausman Test showing fixed effect outcome

Test Summary	Chi-Sq. Statistic	Chi-Sq. d.f.	Prob.
Cross-section random	9.339	2	0.02

Table 5. NTA Regression Analysis (Fixed Effect)

Variables	Coefficient	Std. Error	t-statistic	Prob.
Constant	11.485	7.143	1.608	0.115
LNAUDF	0.445	0.242	1.839	0.072*
LNTEX	0.144	0.091	1.594	0.118
LNTAS	0.069	0.306	0.225	0.823
R^2	0.928
Adj. R^2	0.910
S.E. of regression	0.720
Durbin-Watson stat	1.977
F-statistic	50.87			0.000***

Research Outcome, 2022 Significant at 10%; ** Significant at 5%; *** Significant at 1%

Table 6. Hausman Test indicating random effect

Test Summary	Chi-Sq. Statistic	Chi-Sq. d.f.	Prob.
Cross-section random	2.048	3	0.562

Table 7. PAT Regression Analysis (Random Effect)Dependent variable: LNPAT

Variable	Coefficient	Std. Error	t-statistic	Prob.
Constant (C)	0.638	4.272	0.149	0.882
LNTEX	0.220	0.082	2.693	0.009***
LNAUDF	1.194	0.201	5.934	0.000***
LN TAS	−0.148	0.149	−0.993	0.324
R^2	0.535
Adj. R^2	0.509
S.E. of regression	0.895
Durbin-Watson stat	2.081
F-statistic	21.45			0.000***

Note: Source: Research Outcome, 2022

***Significant at 1% Dependent variable: LNPAT Predictors: LNAUDF and LNTEX

Table 8. Test for Hypothesis

Null Hypothesis	Indicators	P-value	T-value	Decision
H01	Impact of statutory audits on profit after tax	0.000	5.934	Reject H01
H02	Impact of statutory audits on net assets	0.072	1.839	Reject H02
H03	Impact of corporate taxation on profit after tax	0.009	2.693	Reject H03
H04	Impact of corporate taxation on net assets	0.118	1.594	We do not reject H04

Source: Research outcome, 2022

Figure 2. Trend of data from 2016–2021.

Source of Data: Published annual financial reports of firms used in this study

Figure 3. Trend of data from 2016–2021.

Source of Data: Published annual financial reports of firms used in this study