Accounting Project Topics

The Effect of Female Audit Committee Characteristics on Audit Fees of Listed Consumer Goods Sector in Nigeria

The Effect of Female Audit Committee Characteristics on Audit Fees of Listed Consumer Goods Sector in Nigeria

The Effect of Female Audit Committee Characteristics on Audit Fees of Listed Consumer Goods Sector in Nigeria

Chapter One

Objectives of the Study

The main objective of the study is to investigate the effect of female audit committee characteristics on audit fees of listed consumer goods sector in Nigeria while the specific objectives include:

  1. To examine the effect of female audit committee size on the audit fees of listed consumer goods firms in Nigeria.
  2. To examine the effect of audit committee diversity on the audit fees of listed consumer goods firms in Nigeria.
  3. To examine the effect of female audit committee composition on the audit fees of listed consumer goods firms in Nigeria.
  4. To examine the effect of female audit committee independence on the audit fees of listed consumer goods firms in Nigeria

CHAPTER TWO

LITERATURE REVIEW

 Introduction 

This section places the study in the context of past researches. It critically reviewed and conceptualized the research undertaken on the effect of female audit committee characteristics on audit fees of listed consumer goods sector in Nigeria. A survey of literatures was done extensively, theoretically and empirically concerning female audit committee characteristics and audit fees of listed consumer goods sector in Nigeria. Emphasis is placed on female audit committee size, audit committee diversity, female audit committee composition and female audit committee independence  as they relate to audit fees of listed consumer goods sector in Nigeria.

Conceptualization

 Concept of Female Audit Committee Characteristics

It is widely acknowledged in the psychology and management literature that gender differences exist e.g., in cognitive functioning, communicative skills, decision- making, and leadership style. Considerable evidence suggests that women have better communicative capabilities, and may thereby have a comparative advantage over men in tasks that require communication within and among different groups (see e.g., Ahmed & Che-Ahmad, 2016; Rahahleh & Hamzah, 2019). Because women communicate and listen more effectively, they tend to perform better than men on group problem-solving and decision-making tasks requiring discussion and consensus (Ishaq, 2016). Moreover, gender diversity in decision-making groups obviously provides greater diversity of opinions and interests, which in turn may lead to better decisions (see e.g., Anasweh, 2021). The alternative view is that social diversity (gender, age, ethnic groups) may lead to reduce within-group communication and increase disagreements and conflicts (see e.g., Williams and O’Reilly, 1998; Jehn et al., 1999), thereby reducing the effectiveness of decision-making groups. Thus, the recent corporate governance literature has recognized that gender diversity may affect the functioning and efficiency of corporate boards and committees (see e.g., Fondas and Sassalos 2000; Erhardt et al. 2003; Huse and Solberg 2006; Rose 2007; Adams and Ferreira 2009; Huse et al. 2009; Nielsen and Huse 2010). In general, prior studies indicate that female representation may enhance the effectiveness and monitoring activities of the board.

Besides the potential effects on group dynamics, at least two additional features of gender differences merit discussion in corporate governance context. First, as noted by Ogbonnaya, (2020), women tend to have higher expectations regarding their responsibilities as directors, which may induce them to expend more effort on their tasks. In a similar vein, Okenwa & John-david, (2021)show that women in corporate boards are better prepared for board meetings than men, and female representation may thus improve board behavior and effectiveness. Further, given the glass ceiling phenomenon, women have to demonstrate extra competence in order to reach managerial positions and corporate boards (Ittonen, 2014). Consequently, gender diversity may improve the efficiency of corporate boards and committees simply because the female representatives, in general, are presumably highly competent and hard-working. On a related note, recent empirical studies by (Ogungbade, 2021) indicate that female financial analysts are generally more competent than their male counterparts. Bala et al., (2018)argues that female financial analysts possess better-than-average skills due to gender discrimination in the labor market.

 

CHAPTER THREE

RESEARCH METHODOLOGY

Introduction 

This chapter details the methodology adopted for the study. Its present: research design, population of the study, sample size, sampling technique, method of data analysis, technique of data analysis and variable definition and measurement.

Research Design 

This study empirically investigated the effect of capital structure on corporate performance of listed  consumer  goods  firms  in  Nigeria.  In  view  of  this,  the  study  therefore  adopted  the correlation  research  design.  A  correlation  research  design  is the design suited for cause and effects relationship  between  two  or  more  variables  (Ahmed & Che-Ahmad, 2016).  It  is considered to be the most  appropriate  for  this study  because  it  allows  for  testing  of  expected  relationships  between  and  among  variables and the making of predictions regarding such relationships.

Population and sample size of the Study 

The population of this study consists of 28 quoted consumer goods firms listed on the floor of the Nigerian Stock Exchange (NSE) as at 31 December 2020.

A total of ten firms were being used as sample size since there is the availability of their data. The selection of the 10 companies out of the 28 follows judgmental or purposive non-probability sampling technique. It should be noted that each company must have delivered its annual report for the year 2015 to 2020 (i.e., sampling frame). The firms selected that made up the sample size are: Nestle Nigeria Plc, PZ Cusson, Guinness, Cadbury Nig. Plc, Nigerian Breweries, Vitafoam Nig. Plc, Dangote cement Plc, Dangote sugar, Dangote flour and Champions Breweries.

CHAPTER FOUR 

RESULT PRESENTATION AND ANALYSIS 

 Introduction 

This chapter presents, interprets, and discusses the results obtained from the data. The chapter begins with descriptive statistics, correlation matrix, Hausman- specification and multicollinearity test of  the variables. This is followed by the presentation and discussion of the regression results and test of hypotheses. The chapter concludes with discussion of findings of the study and policy implications of the findings.

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

Summary 

This study was conducted to investigate the effect of female audit committee characteristics on audit fees of listed consumer goods sector in Nigeria. The study was divided into five chapters. The first chapter discussed the background issues, which led to developing four objectives and formulating four hypotheses for the research with a scope covering five (6) years, from 2015 to 2020. The review of conceptual literature and empirical studies on female audit characteristics and audit fees was carried out. Also, the concept and measurement of audit fees was discussed as well as the review of the relationship between each of the proxies of the independent variables and the dependent variable. The theoretical framework that underpinned the study was also discussed.

Correlation research design was used in measuring the relationship among the variables of the study. Data was collected from secondary source through the annual reports and accounts of 10 sampled firms out of a population of 20 listed consumer goods in Nigerian Stock Exchange that have complete financial records either on their website or in the office of the Nigerian Stock Exchange. Multiple regression was used to test three hypotheses formulated by the study. The result of the descriptive statistics, correlation matrix and regression were presented, analysed and discussed in chapter four. The regression result  provided sufficient evidence for rejecting first and third hypotheses but accept the second:

  1. female audit committee size has no significant effect on audit fees of listed consumer goods firms in Nigeria.
  2. female audit committee diversity has significant effect on audit fees of listed consumer goods firms in Nigeria.
  3. female audit committee share composition has significant effect on audit fees of listed consumer goods firms in Nigeria.
  4. female audit committee share independence has significant effect on audit fees of listed consumer goods firms in Nigeria

Finally, the chapter discussed the findings of the research in light of previous studies and highlighted the policy implications of the findings.

 Conclusion

The study makes the following conclusions based on the findings derived from the study analysis: the female audit committee size has a positive insignificant association with the audit fees of listed consumer goods companies in Nigeria;  the female audit committee diversity has a negative significant correlation with the audit fees of  listed consumer goods companies in Nigeria; and  the female audit committee share composition has a negative significant relationship with the audit fees of listed consumer goods companies in Nigeria.

The female audit committee share composition has a positive significant relationship with the audit fees of listed consumer goods companies in Nigeria.

Recommendation

Based on these conclusions, the study makes the following recommendations:

First, the management of consumer goods sector in Nigeria should increase the number of the female audit committee size to the minimum of five (5) for all the consumer goods companies operating in Nigeria as it is seen to influence the audit fees of listed consumer goods companies in Nigeria. Doing so will maintain and improve the audited financial statement prepared by the external auditors of the consumer goods companies in Nigeria.

Secondly, the management of consumer goods companies in Nigeria should increase the number of the women directors in relation to men director in audit committee for all the consumer goods companies operating in Nigeria as they female audit committee diversity is seen to influence the audit fees of listed consumer goods companies in Nigeria. This suggestion if implemented will encourage women directors as audit committee members to thoroughly scrutinize auditor reports before presenting it at the company’s annual general meeting.

Thirdly, the management of consumer goods companies in Nigeria should increase the number of  female company’s owners in audit committee to the minimum of 2 and maximum of 3 for all the consumer goods companies operating in Nigeria as they are seen to improve audit fees of listed consumer goods companies in Nigeria. Doing so will encourage the company’s owners to monitor and proper scrutinizing the works done by external auditors to strengthen company operational activities.

Finally, the Security and Exchange Commission (SEC) and other regulatory bodies of the companies should drive the refinement and includes in the corporate governance code for companies and other sectors operating in the country as a provision that management of companies must ensure total compliance. This suggestion if accepts will go a long way in sustaining the system and continues improving audit reports prepared by external auditors of listed consumer goods companies in Nigeria.

Limitations of the Study 

As it is the case with all studies, this study is associated with some limitations. The findings of this study are therefore to be considered in light of the following limitations:

The study intended to use the entire population of listed consumer gooods in Nigeria to constitute the population of the study. But some firms do not have complete financial records either on their website or in the office of Nigerian Stock Exchange during the period of the study. The study considered only those firms that meet up with the criterion to form the adjusted population. Therefore, the findings and recommendations of the study may not apply to the firms that were not covered by the study.

The study considered only three proxies of female audit committee characteristics without considering other proxies that determine female audit committee characteristics such as female audit committee composition.

Areas for Further Research 

The issues involved in this study area cannot all together be covered by a single research, and hence, the need for further research. The following research areas are hereby recommended:

The study covered only listed consumer  goods in Nigerian for the period of six years. Therefore, there is the need for further research using other sectors and more years in Nigeria.

Researchers in this area can carry out similar studies using audit quality as their dependent variables to assist in providing a clear guidance to managers of consumer goods firm in Nigeria

REFERENCES

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