Do Audit Fees and Auditor Independence Influence Audit Quality?

In this paper, we examine whether audit fees and independence affect audit quality in the context of Nigeria poor corporate governance setting. We use a sample of 12 quoted industrial goods firms from the Nigerian Exchange Group over 2006-2020, yielding 180 observations. We provide the first evidence on the effect of audit fees on audit quality. We also provide evidence on the influence of audit independence on audit quality. We established that audit fees lead to improved audit quality. We similarly established that audit independence would lead to improve audit quality. Consistent with the signaling theory, we conclude that audit fees and audit independence are determinants of and more likely to lead to better audit quality. These findings offer a promising future to stakeholders to understand better a robust and strong link between audit fees and independence on one hand and audit quality on the other. However, the findings are limited to firms within the sector as the choice sector is open to debate since others are researchable. Also, the findings may have been affected by the methods and model selected; using broader set of variables that can act as proxies could be considered