Assessing the effect of auditing on bank’s financial performance: A panel regression analysis, evidence from Ghana

Abstract

The paper aimed to find if the internal audit committees and their independence have any significant effect on banks’ financial performance. The data used in our paper is an annual time series data spanning 2014 and 2019. The study conducted a panel data regression analysis after going through the Hausman test to select the Random Effect model for estimation. The paper again used data six banks selected from the PWC-2019 banking survey. The study presents results that showed that there are some statistically insignificant effects of our main regressor thus Audit, bank’s financial performance for selected banks within the period of study. The study rather found bank’s cost-to-income ratio have a significant negative effect on financial performance. This is true because the more efficient a bank is, the more it cuts down on avoidable costs to increase its financial performance.

Keywords: Audit Independence, Financial Performance and Reporting, Bank Profitability.

DOI: 10.7176/RJFA/12-16-10

Publication date:August 31^st 2021