Managerial Ability, Audit Firm Industry Specialisation, and Audit Pricing in Commercial Banks: A Mediation Analysis

Tajudeen John Ayoola (), Eghosa Godwin Inneh () and Lawrence Ogechukwu Obokoh ()
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Tajudeen John Ayoola: University of Johannesburg, South Africa and Obafemi Awolowo University
Eghosa Godwin Inneh: University of Johannesburg
Lawrence Ogechukwu Obokoh: University of Johannesburg

A chapter in Impacting Society Positively Through Technology in Accounting and Business Processes, 2025, pp 903-920 from Springer

Abstract: Abstract The association between managerial ability and audit pricing is limited and mixed in the literature. The mixed results may be due to the non-consideration of the plausibility of a mediating variable influencing the association. Therefore, this study, conducted in the context of the Nigerian banking industry, assesses the mediating role of audit firm industry specialisation on the association between managerial ability and audit pricing. Managerial ability is proxied using the Data Envelopment Analysis (DEA)–Tobit regression model, audit firm industry specialisation is proxied using an indicator variable that is equal to one if the audit firm has at least a market share of 30%, while audit pricing is proxied using audit fees. Secondary data obtained from the audited annual financial statements of 11 listed deposit money banks (commercial banks) between 2011 and 2022 are used for this study. The causal mediation analysis framework in an instrumental-variable regression model is adopted to empirically achieve the study’s objective. The findings show that audit firm industry specialisation mediated the association between managerial ability and audit pricing in the Nigerian banking industry. Our findings have implications for bank management, audit firms, and regulatory agencies.

Keywords: Nigerian banks; Managerial ability; Audit pricing; Audit firm industry specialisation; Data envelopment analysis; Causal mediation analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-84885-8_49

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DOI: 10.1007/978-3-031-84885-8_49

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