Audit fees, audit seasonality and audit quality in Nigeria: a mediation analysis

Abstract

Purpose This study aims to examine the mediating role of audit seasonality on the association between audit fees and audit quality in Nigerian deposit money banks. Design/methodology/approach The sample comprises 14 banks with annual financial statements between 2008 and 2020. The modified Baron and Kenny’s (1986) causal mediation model by Iacobucci et al. (2007) through the use of bootstrapped partial least square structural equation modelling and Sobel’s (1986) z-test is adopted to achieve this study’s objective. Findings The results of the causal mediation analysis show evidence of a fully mediating role of audit seasonality in the association between audit fees and audit quality in the Nigerian banking industry. Research limitations/implications This study extends the body of knowledge by demonstrating how audit fees influence audit quality through audit seasonality as a mediator in line with the job demands-and resources and conservation of resources theories. Regulatory authorities should be wary of policies that will further increase the workload of already burdened personnel of audit firms as the uniform fiscal year-end of 31 December introduced in the Nigerian banking system has unintended consequences on audit fees and audit quality. Originality/value To the best of the author’s knowledge, this is one of the first studies to provide evidence on the indirect association between audit fees and audit quality.