The Effect of Ownership Structures on Audit Fees of Listed Firms in Ghana

Abstract

Research aims: The study examined the effect of ownership structures on audit fees of listed firms in Ghana. The study used four indicators to measure ownership structure: managerial ownership, foreign ownership, government ownership, and substantial (block) ownership.Design/Methodology/Approach: The study sampled 21 listed non-financial firms over ten years, covering the period 2010 to 2019. The study also relied on secondary data extracted from the financial statement of these listed firms. Data were analyzed using descriptive statistics, correlation analysis, and panel regression analysis.Research findings: The study results showed a positive and significant association between foreign ownership and audit fees in Ghana. The study further found a positive and significant relationship between block ownership and audit fees. The results, however, uncovered an insignificant association between government ownership and audit fees. Furthermore, the study reported a positive coefficient between block ownership and audit fees, and the relationship was statistically significant.Theoretical contribution/Originality: The study is among very few studies that have examined ownership structures such as foreign ownership, managerial ownership, government ownership, and block ownership on audit fees in a developing country context and Ghana.Practitioner/Policy implication: This study found that the higher agency conflict through ownership structures will give rise to the higher audit fees paid to external auditors, which managers and auditors should consider in future assignments.Research limitation/implication: The study is limited by geographical area (Ghana), and as such future studies can conduct cross-country analysis of ownership structures on audit fees.

Gender of firm leadership, audit committee gender diversity and audit quality through the lens of audit fee: a Ghanaian insight

“…The revelation from the study is that an inverse relationship exists between CEO succession with gender change and audit fee that is paid but the negative effect was found to be less in state-owned firms as compared to firms not owned by the state. In addition, Musah et al (2022) report no significant impact of female CEO on audit fee. Conversely, studying the impact of demographic characteristics of CEOs and directors on audit fees and audit delay, Harjoto et al (2015) found that firms with female and ethnic minority CEOs pay significantly higher audit fees than those with male Caucasian CEOs.…”

“…To address the specific objective of the study, the specific regression model for the study was developed following the works of Miglani and Ahmed (2019), Alkebsee et al (2020), Gull et al (2021) and Musah et al (2022), but with modifications and inclusion of new gender variables. However, for purposes of estimation, ordinary least square (OLS) estimation and generalized least square (fixed-effect estimation technique) were used.…”

“…Following the scholarly articles of Miglani and Ahmed (2019), Alkebsee et al (2020), Gull et al (2021) and Musah et al (2022), the study adopts woman board chairperson, woman CEO and percentage of women on boards as the main independent variables of interest. The study argues that because women tend to be less overconfident and want assurances from external auditors for financial report quality, they may be associated with higher audit fee.…”

“…The conclusion drawn from the above finding is that the presence of women on board has the ability to enhance monitoring of management, which ensures that internal control systems and financial reporting systems work and produce results, which reduces external audit effort, hence lower audit fee. Similarly, Musah et al (2022) using non-financial firm data from Ghana showed that female representation on boards reduces audit fees. Furthermore, Nekhili et al (2020) empirically demonstrate that female independent directors by improving board monitoring effectiveness affect the auditor's assessment of audit risk, which results in lower audit fee.…”

Can Corporate Governance Protect Firm Performance During The Covid-19 Pandemic?

“…Therefore, it can encourage managers not to do detrimental things to investors or opportunistic behavior to maximize the manager's work in improving financial performance. According to (Musah et al, 2021), control in companies with dispersed ownership significantly lies with management. Managers can use this opportunity to fulfill their interests at the expense of shareholders.…”