Ownership Structure and Audit Fees among Listed Financial Service Firms in Nigeria

Abstract

This study aims at examining the effect of ownership structure on audit fees among listed financial service firms in Nigeria. In realizing the objectives of the study, the study adopts correlational research design using ordinary least square regression as a tool of analysis. The study used secondary data extracted from the published financial statements of the sampled firms for the period (2007 to 2020). The population of the study consists of 53 listed financial service firms in Nigeria. The dependent variable of the study is audit fees while managerial and institutional ownership were used as independent variables of the study. The findings suggest a significant positive association between institutional ownership and audit fee. Conversely, the findings do not propose any association of managerial ownership with the audit fee. The empirical finding of the study reveals that the explanatory powers of institutional ownership shows a positive significant effect on the predictive factor (audit fees) among listed financial service firms in Nigeria. This study provides useful insights into the importance of ownership role in enhancing the effectiveness of external auditing among listed financial service firms in Nigeria. The study provides evidence that, the monitoring role of institutional ownership has significant effect on audit fees. Also, firm size as a control variable of the study has positive and significant effect on audit fees. The findings of this study may prove helpful to regulators and investors to have insight into the nature of ownership structure in the Nigerian listed financial service firms as an important factor to determine the quality of financial reporting and cost of audit. Based on the findings of this study, it is therefore recommended among others that, Nigerian Security and Exchange Commission should support and encourage institutional investment among Nigerian listed financial firms. In essence this will improve their monitoring roles, ensure the selection of a reputable external audit firm, and have better financial reporting process.