Audit fees, audit seasonality and audit quality in Nigeria: a mediation analysis

Abstract

Purpose This study aims to examine the mediating role of audit seasonality on the association between audit fees and audit quality in Nigerian deposit money banks. Design/methodology/approach The sample comprises 14 banks with annual financial statements between 2008 and 2020. The modified Baron and Kenny’s (1986) causal mediation model by Iacobucci et al. (2007) through the use of bootstrapped partial least square structural equation modelling and Sobel’s (1986) z-test is adopted to achieve this study’s objective. Findings The results of the causal mediation analysis show evidence of a fully mediating role of c between audit fees and audit quality in the Nigerian banking industry. Research limitations/implications This study extends the body of knowledge by demonstrating how audit fees influence audit quality through audit seasonality as a mediator in line with the job demands-and resources and conservation of resources theories. Regulatory authorities should be wary of policies that will further increase the workload of already burdened personnel of audit firms as the uniform fiscal year-end of 31 December introduced in the Nigerian banking system has unintended consequences on audit fees and audit quality. Originality/value To the best of the author’s knowledge, this is one of the first studies to provide evidence on the indirect association between audit fees and audit quality.

Competition and efficiency in an oligopolistic audit market: Evidence from the Nigerian banking industry

“…The study uses ARL, commonly used in literature, as a proxy for audit efficiency to ensure the robustness of the results. The empirical results in Table 4, column (5), show that three variables (CONC, DIFF, and CIMP) are significant. The coefficient of concentration (CONC) is negative and significant (-387.969, p = 0.021).…”

“…In line with some empirical studies (e.g., Ayoola, 2022), the model for deriving audit quality is the non-discretionary constituent of loan loss provision stated as follows:…”

“…Column (1) presents the result of a bootstrapped truncated regression model, column(2) presents the result of the fractional regression model, column (3) presents the result of random effect regression, while column (4) presents the result of Arellano-Bover/Blundell-Bond, dynamic panel data model. Column(5) presents the result of random effect regression, where the dependent variable is audit report lag. The z-statistics are shown in parentheses, while ***, **, and * reflect the significance level at 1, 5, and 10%, respectively.…”

Semiotics of audit quality: a meta-analysis perspective

“…Several studies have widely investigated the relationship between audit fees and audit quality and have been published in reputable international journals (Ayoola, 2022; Cahan studies also link the relationship between audit quality, audit fees, and the public accounting firm size variable. In this context, size is a variable whose impact may be explained by the agency concept approach (Dragomir & Dumitru, 2023).…”

The Influence of Information Technology Based Audit Procedures and Audit Experience on Audit Quality

“…Audit quality is not necessarily influenced by just one or two things. Several factors can influence the quality of audits from public accounting firms (Ayoola, 2022). Analyzed several factors that influence audit quality including independence, audit fees, experience, audit time pressure and audit procedures as mediating variables.…”