Effect of firm characteristics on audit fees among quoted healthcare companies in Nigeria

Abstract

The study examined the effect of firm characteristics on audit fees among quoted healthcare companies in Nigeria. The study utilized a longitudinal research design to capture variations across firms and over time. The population comprised all quoted healthcare companies in Nigeria, and a census approach was adopted involving seven (7) firms over the period 2015 to 2024. Secondary data were obtained from published annual financial statements. The Generalized Linear Model (GLM) was employed for analysis. The findings revealed that audit fees exhibit strong persistence over time, indicating that previous audit engagements significantly influence current audit pricing. Firm complexity had a positive and significant effect on audit fees, showing that more complex healthcare firms incur higher audit costs due to increased audit effort. Firm size also showed a positive and significant relationship with audit fees. Firm profitability was positively and significantly associated with audit fees. Firm leverage equally exhibited a positive and significant effect. Firm liquidity also showed a significant positive relationship with audit fees. In conclusion, firm characteristics significantly influence audit fees among quoted healthcare companies in Nigeria, confirming that audit pricing is largely driven by firm-specific attributes. It is therefore recommended that firms should improve operational efficiency and internal control systems to manage audit costs effectively. Highly leveraged firms should adopt prudent financial strategies to reduce audit risk exposure. Regulators should ensure enhanced transparency in audit fee disclosures, while auditors should continue to apply risk-based pricing models that reflect client characteristics.