Effect of Firms’ Attributes on Audit Fees of Financial Service Firms in Nigeria (Published)
The increasing disparity in audit fees, which represent significant expenses for financial service firms, with rising skepticism regarding the value and quality of audits, underscores the need to examine the effect of firm-specific attributes on audit fees. This study investigates how firm size, board size, firm profitability, and firm leverage influence audit fees among financial service firms in Nigeria. Secondary data were collected from a purposive sample of 15 firms listed on the Nigerian Exchange Group over the 2013–2023 period, comprising 165 firm-year observations. Utilizing descriptive statistics, correlation analysis, the Levin et al., unit root test for data stationarity, and a Panel Least Square Regression Model, the study found that firm size and profitability positively and significantly affect audit fees, while board size and leverage do not have a significant effect. These results suggest that larger and more profitable firms encounter greater audit complexity. The study recommends that managers of large and profitable firms enhance internal controls and risk management practices to maintain audit quality with sustainable fee levels. Additionally, policymakers can use these insights to refine governance guidelines within Nigeria’s financial services sector. These findings add to the scarce empirical research on audit fee determinants in Nigeria and provide actionable insights for managers, auditors, and policymakers
Keywords: Audit Fees, Nigerian financial services, agency and growth of the fitters’ theories, firms’ attributes