Title Page
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Table of content vi
List of Tables viii
List of Appendices ix
Abstract x
CHAPTER ONE: INTRODUCTION
1.1 Background to the study 1
1.2 Statement of the Problem 3
1.3 Research Objectives 6
Research Questions 6
1.5 Research Hypothesis 6
1.6 Scope of the Study 7
1.7 Significance of the Study 7
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction 9
2.1 Concepts of Audit and Audit Fees 9
2.2 The Audit Expectation Gap and Audit Fees 21
2.3 Factors Affecting Audit Fee 22
2.4 Theories of Auditing 28
2.5 Empirical Review 31
3.0 Summary of Literature Review 37
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Introduction 38
3.1 Research design 38
3.2 Population and Scope of the Study 38
3.3 Sample Size and Sample Technique 39
3.4 Data collection method 40
3.5 Variables definition and measurement 40
3.6 Data Analysis 43
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 Introduction 46 4.2 Descriptive Statistics 46
4.3 Correlation Coefficients 49
4.4 Diagnostic Tests 52
4.5 Regression Analysis and Test of Hypotheses 55
4.6 Discussion of Findings and implication of the study 62
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.0 Introduction 65
5.1 Summary 65
5.2 Conclusion and Recommendation 66
5.3 Contribution to Knowledge 68
5.4 Suggestion for Further Study 68
REFERENCES 71
APPENDICES 78
LIST OF TABLES
Table 3.1 Population of the Study 39
Table 3.2 Sample Size 39
Table 4.1 Descriptive Statistics 45
Table 4.2 Correlation Matrix 48
Table 4.3 Test for Data Normality 52
Table 4.4 Variance Inflation Factor (VIF) for Multicolinearity 53
Table 4.5 Hettest, Fixed-Random Specification, Random Effect and Fixed Effect 55
Table 4.6 Generalised Least Square Regression 56
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LIST OF APPENDICES
Appendix A Descriptive Statistics 78
Appendix B Pair-wise Correlation Coefficient 79
Appendix C Test for Data Normality 80
Appendix D Variance Inflation Factor for Multicolinearity 81
Appendix E Regression Analysis between Audit Fees and Audit Client Characteristics 82
Appendix F Regression Analysis between Audit Fees and Corporate Governance Codes 86
Appendix G Regression Analysis between Audit Fees and Audit Firm Characteristics 89
ABSTRACT
This study is aimed at ascertaining the effect of audit client characteristics, audit firm characteristics, corporate governance variables in the determination of audit fees of listed pharmaceutical firms in Nigeria. Panel research design was adopted for this study on a population of eleven (11) listed pharmaceutical firms in Nigeria, out of which seven (7) firms were sampled for the study using purposive sampling technique for the period of six years from 2012-2017. Secondary data obtained from the published annual accounts and reports of Seven (7) listed pharmaceutical firms were used for this study. Descriptive and correlation analysis were also used to analyse the relationship between the independent variables (audit client size, profitability inherent risk, level of debt, board size, board independence, board diligence, audit tenure, audit type) in the three models with audit fee. Thereafter, multiple regression analysis was conducted using pooled ordinary least squares and the panel estimated generalized least squares. The result for audit firm characteristics revealed that there is a positive significant relationship between audit client size and audit fees; while profitability and level of debt of audit clients have an insignificant negative effect on audit fee. However, audit client’s inherent risk of has a positive insignificant effect on audit fees. This study also reveals the result of corporate governance variables that board diligence has a positive significant effect on audit fees, while board size and board independence have a negative insignificant effect on audit fees. The result from audit firm characteristics and audit fees revealed that audit tenure has a significant positive effect on audit fees, while audit type has a positive insignificant effect on audit fees. However, there are several limitations faced in this study which included the generalisation of the research finding and measurement tools used to define the independent variables. This study provides important insight on the determinants which are significantly related to audit fees paid by listed pharmaceutical firms in Nigeria and charged by the auditors which helps auditors in pricing the audit services appropriately. Also, regulatory bodies can use this research to regulate the practice of audit pricing.
