Regulatory changes and audit fees: the moderating effect of overlapping directorship and financial reporting quality

Salau Olarinoye Abdulmalik and Ayoib Che-Ahmad

African Journal of Economic and Management Studies, 2020, vol. 12, issue 1, 90-104

Abstract: Purpose - This study examines the contemporaneous changes in the reporting regime in Nigeria by investigating the effect of regulatory changes on audit fees as well as the moderating effect of overlapping directorship and financial reporting quality. Design/methodology/approach - This study utilises a longitudinal sample of 409 firm-year observations, from 2008 to 2013, of nonfinancial companies listed on the Nigerian stock exchange. The study uses the general method of moments (GMM) to control for endogeneity concerns. Findings - The results reveal that, without the moderating effect of overlapping directorship and financial reporting quality, the relationship between regulatory changes and audit fees is positive but weak, which suggests that regulatory changes drive cost. Similarly, the interaction of overlapping directorship did not reverse the positive relationship, which suggests the perceived risk associated with overlapping directorship. However, the improvement in financial reporting quality reverses the relationship, as evidenced by the negative and significant coefficient on the interacted terms. Practical implications - This study provides useful insights about committee membership overlap to regulatory authorities concerning the weakness of the monitoring ability of such committees. Originality/value - The results of this study contribute to the growing literature on regulatory reform, audit fees and corporate governance. Specifically, the study provides empirical evidence on the effect of committee overlap on audit fees, which, to the best of the researchers' knowledge, has received no empirical attention in the Nigerian context.

Keywords: Audit fees; Regulatory changes; Overlapping directorship (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ajemsp:ajems-04-2019-0158

DOI: 10.1108/AJEMS-04-2019-0158

Access Statistics for this article

African Journal of Economic and Management Studies is currently edited by Prof John Kuada

More articles in African Journal of Economic and Management Studies from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().