DETERMINANTS OF ABNORMAL AUDIT FEES IN NIGERIAN QUOTED COMPANIES

O. J. Ilaboya (), M. O. Izevbekhai () and G. Ohiokha ()
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O. J. Ilaboya: University of Benin, Benin City, Edo State, Nigeria
M. O. Izevbekhai: Federal Polytechnic, Auchi, Edo State, Nigeria
G. Ohiokha: Federal Polytechnic, Auchi, Edo State, Nigeria

Economic Thought and Practice, 2017, vol. 26, issue 1, 65-83

Abstract: The aim of the study is to investigate the determinants of abnormal audit fees in Nigerian quoted companies, with specific emphasis on how the firm size, Big4, profitability, joint audit, and leverage impact on abnormal audit fee. The study involved about eighty four (84) manufacturing companies quoted on the Nigerian Stock Exchange as at 31st December 2014. A sample of 56 companies representing 67% was finally selected for the study. Panel regression estimation technique was used in the analysis of the variables. The choice of the panel regression technique is premised on its quality of unbiasedness, increased data point, and control for individual heterogeneity. To test the accuracy of the model, we employed the classical regression assumption tests of normality, heteroskedasticity, serial correlation and multi co-linearity. The study found a positive and statistically significant relationship between the interaction of Big 4 audit firms and firm size and the dependent variable of abnormal audit fees which implies that large firms using Big 4 audit firms tend to pay abnormal audit fees. We, therefore, recommend that large firms should patronise reputable indigenous audit firms.

Keywords: Abnormal audit fee; firm size; profitability; joint audit; leverage (search for similar items in EconPapers)
JEL-codes: G29 L25 M42 (search for similar items in EconPapers)
Date: 2017
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