IDEAS home Printed from https://ideas.repec.org/a/prg/jnlefa/v2015y2015i4id149p45-65.html
   My bibliography  Save this article

The Effect of 2011 Revised Code of Corporate Governance on Pricing Behaviour of Nigerian Auditors

Author

Listed:
  • Salau O. Abdulmalik
  • Ayoib Che Ahmad

Abstract

The paper examines the extent which risk management committee and corporate governance committee predict audit fees in Nigeria. We employed random panel data (unbalance) regression analysis to establish whether risk management committee and corporate governance committee affect audit fees. We obtained the data used for this study from the annual reports of public listed companies on the Nigerian Stock Exchange for the periods 2008-2013. Our results indicate a positive relationship between establishment of risk management committee and audit fees while the establishment of corporate governance committee has an insignificant relationship with audit fees. The findings provide evidence to inform policy makers and corporation in Nigeria on how their governance structure affects audit fees. Firms with a strong governance structure have the incentive to improve the quality of their financial report. Therefore, such firms will increase the scope of auditor’s work. This result has implication for policy makers because it suggests that corporate governance mechanisms are important in ensuring a quality audit. The paper contributes to literature on audit pricing in the context of the Nigerian audit market that is currently under-researched. The study provides additional theoretical insights by investigating the impact of risk management committee and corporate governance committee on audit fees, which to the best of the researcher’s knowledge, have not been tested in the audit fees model.

Suggested Citation

  • Salau O. Abdulmalik & Ayoib Che Ahmad, 2015. "The Effect of 2011 Revised Code of Corporate Governance on Pricing Behaviour of Nigerian Auditors," European Financial and Accounting Journal, University of Economics, Prague, vol. 2015(4), pages 45-65.
  • Handle: RePEc:prg:jnlefa:v:2015:y:2015:i:4:id:149:p:45-65
    as

    Download full text from publisher

    File URL: http://www.vse.cz/polek/download.php?jnl=efaj&pdf=149.pdf
    Download Restriction: free of charge

    File URL: http://www.vse.cz/efaj/149
    Download Restriction: free of charge

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stuart Turley & Mahbub Zaman, 2007. "Audit committee effectiveness: informal processes and behavioural effects," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 20(5), pages 765-788, September.
    2. Kane, Gregory D. & Velury, Uma, 2004. "The role of institutional ownership in the market for auditing services: an empirical investigation," Journal of Business Research, Elsevier, vol. 57(9), pages 976-983, September.
    3. Shleifer, Andrei & Vishny, Robert W, 1997. " A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    4. repec:hrv:faseco:30728046 is not listed on IDEAS
    5. Menon, Krishnagopal & Deahl Williams, Joanne, 1994. "The use of audit committees for monitoring," Journal of Accounting and Public Policy, Elsevier, vol. 13(2), pages 121-139.
    6. Ronen, Joshua, 2002. "Policy reforms in the aftermath of accounting scandals," Journal of Accounting and Public Policy, Elsevier, vol. 21(4-5), pages 281-286.
    7. Santanu Mitra & Mahmud Hossain & Donald Deis, 2007. "The empirical relationship between ownership characteristics and audit fees," Review of Quantitative Finance and Accounting, Springer, vol. 28(3), pages 257-285, April.
    8. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    9. El'fred Boo & Divesh Sharma, 2008. "Effect of regulatory oversight on the association between internal governance characteristics and audit fees," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 48(1), pages 51-71.
    10. Mazlina Mustapha & Ayoib Che Ahmad, 2011. "Agency theory and managerial ownership: evidence from Malaysia," Managerial Auditing Journal, Emerald Group Publishing, vol. 26(5), pages 419-436, May.
    11. Anup Agrawal & Charles R. Knoeber, "undated". "Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders (Revision of 29-94)," Rodney L. White Center for Financial Research Working Papers 08-96, Wharton School Rodney L. White Center for Financial Research.
    12. Gorton, Gary & Schmid, Frank A., 2000. "Universal banking and the performance of German firms," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 29-80.
    13. Desender, Kurt A., 2009. "The Relationship between the Ownership Structure and the Role of the Board," Working Papers 09-0105, University of Illinois at Urbana-Champaign, College of Business.
    14. Mark A. Bliss, 2011. "Does CEO duality constrain board independence? Some evidence from audit pricing," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 51(2), pages 361-380, June.
    15. Mahbub Zaman & Mohammed Hudaib & Roszaini Haniffa, 2011. "Corporate Governance Quality, Audit Fees and Non-Audit Services Fees," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 38(1-2), pages 165-197, January.
    16. Gary Gorton & Frank A. Schmid, 1995. "Universal Banking and the Performance of German Firms Federal Reserve Bank of Chicago," Center for Financial Institutions Working Papers 96-11, Wharton School Center for Financial Institutions, University of Pennsylvania.
    17. W. Robert Knechel & Marleen Willekens, 2006. "The Role of Risk Management and Governance in Determining Audit Demand," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(9-10), pages 1344-1367.
    18. Joseph V. Carcello & Terry L. Neal, 2003. "Audit Committee Independence and Disclosure: choice for financially distressed firms," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(4), pages 289-299, October.
    19. Elizabeth Carson, 2002. "Factors Associated with the Development of Board Sub-committees," Corporate Governance: An International Review, Wiley Blackwell, vol. 10(1), pages 4-18, January.
    20. DeFond, Mark & Zhang, Jieying, 2014. "A review of archival auditing research," Journal of Accounting and Economics, Elsevier, vol. 58(2), pages 275-326.
    21. Anup Agrawal & Charles R. Knoeber, "undated". "Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders (Revision of 29-94)," Rodney L. White Center for Financial Research Working Papers 8-96, Wharton School Rodney L. White Center for Financial Research.
    22. Agrawal, Anup & Knoeber, Charles R., 1996. "Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 31(03), pages 377-397, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:pdc:jrnbeh:v:14:y:2018:i:2:p:355-374 is not listed on IDEAS

    More about this item

    Keywords

    Risk management committee; Corporate governance committee; Audit fees;

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlefa:v:2015:y:2015:i:4:id:149:p:45-65. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Frantisek Sokolovsky). General contact details of provider: http://edirc.repec.org/data/uevsecz.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.