INDEPENDENT DIRECTORS INFLUENCE ON AUDIT FEES OF QUOTED INSURANCE FIRMS IN NIGERIA: AN ANALYTICAL APPROACH

Abstract

Debate has been ongoing on the factors that determine audit fees particularly at board level as audit fees has been linked to auditor independence and auditor switches which can negatively affect operations of an organization. The objective of this study is to determine if independent director is a factor that affects audit fees of insurance companies listed in Nigeria. Causal and expo facto research design were employed and a sample of 21 companies selected from 27 quoted insurance companies for the period 2009 to 2015. after a filtering process. Secondary data were collected from the annual reports of the companies for the period. The Audit fees is the dependent variable and Independent Director proxied by number on board, is the independent variable, the variable of interest. Company size proxied by total Assets. Company risk Proxied by Debt/Equity ratio. Auditor size proxied by either a Big4 Audit firm or not and firm age are control variables Data were analyzed using multiple regression model aided by the use of computer statistical package - STATA - to run the regression. Findings showed that the existence of independent director on the board is insignificant in the determination of audit fees. The study concludes that existence of Independent director on the board does not influence the audit fees of Nigerian listed Insurance Companies. The study recommends that regulatory authorities should make the appointment of independent director on the board on voluntary basis since they have no financial stake in the company. Furthermore greater emphasis should be placed on improving the effectiveness of non-executive directors on the board to enhance auditor Independence.