The Demand for External Audit Quality: The Contribution of Agency Theory in the Context of Cameroon

Michael Fossung, Samuel Tanjeh Mukah, Kueda Wamba Berthelo and Motika Eubert Nsai

Accounting and Finance Research, 2022, vol. 11, issue 1, 13

Abstract: This study examines the effect of agency theory on the demand for external audit quality in Cameroon. Specifically, it looks at the impact of shareholder/manager agency cost, shareholders/creditors agency cost, and majority/minority shareholders agency cost on external audit quality demand in Cameroon. The focus is on a sample of 171 companies drawn from the regions of Littoral, Centre and North-West using questionnaires. We assess the explanatory power of agency theory on the demand for a better quality of audit in the Cameroonian context by modelling external audit quality as a function of agency costs. The logistic regression analysis allows us to study the nature of any possible interaction. The analysis shows that while an increase in shareholder/creditor agency cost and an increase in shareholder/manager agency cost negatively affect the demand for audit quality, the majority/minority agency cost and the size of the audited client positively and significantly affect the demand for audit quality.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:jfr:afr111:v:11:y:2022:i:1:p:13

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