Corporate Governance and Audit Pricing: An Empirical Study of Ghanaian Listed Firms (2015–2024)

Abstract

This study examines the determinants of audit fees among firms listed on the Ghana Stock Exchange (GSE) over the period 2015–2024, extending earlier research by incorporating a more recent, post-financial-sector-reform era. The study focuses on three broad categories of determinants: client firm characteristics, audit firm attributes, and corporate governance mechanisms. Using a panel data research design with 320 firm-year observations drawn from 32 listed companies and employing Generalised Least Squares (GLS) estimation with fixed effects, the study investigates how variables such as firm size, profitability, complexity, leverage risk, industry classification, audit firm size, audit tenure, board size, board diligence, CEO duality, audit committee independence, and audit committee expertise influence audit fees. Descriptive statistics reveal a mean log audit fee of 5.201 (approximately GHS 159,000), with substantial cross-sectional and temporal variation. The mean log of total assets is 5.610 and mean profitability (ROA) is −0.010, reflecting the mixed financial performance of GSE-listed firms during a decade that encompassed the banking sector clean-up (2017–2019) and the COVID-19 pandemic (2020). Correlation analysis shows strong positive associations between audit fees and client size (r = 0.7643), profitability (r = 0.6546), complexity (r = 0.3750), and leverage risk (r = 0.3254). VIF tests confirm multicollinearity is within acceptable bounds (Mean VIF = 1.78). The Hausman specification test favours the fixed-effects model. The within-firm R² is 0.8270, indicating that the model explains 82.70 percent of the variation in audit fees after controlling for firm-specific effects. Client size emerges as the dominant driver (β = 0.6665, p < 0.001). Corporate governance mechanisms exhibit significant negative associations with fees, consistent with the substitution hypothesis. These findings carry important implications for regulators, investors, and audit professionals navigating Ghana’s evolving corporate environment.