Internal Corporate Governance Practices and Choice of External Auditor in Nigeria: A Logistic Regression Analysis





internal corporate governance practices, external auditor, logistic regression analysis


The research provided empirical evidence on how internal corporate governance practices were proxied by board size, board independence, and share ownership by institutional investors with firm size and leverage as control variables. It might influence the choice of the external auditor, (a dummy proxied with the Big4 versus non-Big4 audit firms dichotomy). The sample was composed of 27 purposely selected quoted non-financial firms spread across 10 sectors on the Nigerian Stock Exchange (NSE). There were 189 firms/year of dataset observations. These secondary panel data were sourced mainly from selected firms’ annual reports and accounts from 2011 to 2017. Moreover, descriptive analysis and test of mean difference were conducted, while the panel logistic regression was adopted as the estimation method. The test of mean difference reveals that many firms with larger board size, board independence, and considerably higher institutional investors engage Big4 auditors. Meanwhile, firms with higher leverage employ non-Big4 auditors. The results from the multivariate analysis show that key determinants of the choice of external auditors are board independence and firm size. This suggests that firms have a higher propensity of choosing a Big4 audit firm as the number of independent board members, as well as their increase in sizes. These findings are mostly consistent with previous studies.


Plum Analytics


Albring, S., Robinson, D., & Robinson, M. (2014). Audit committee financial expertise, corporate governance, and the voluntary switch from auditor-provided to non-auditor-provided tax services. Advances in Accounting, 30(1), 81-94.

Allegrini, M., & Greco, G. (2013). Corporate boards, audit committees and voluntary disclosure: Evidence from Italian listed companies. Journal of Management & Governance, 17(1), 187-216.

Aslan, E., & Aslanertik, B. E. (2017). The determinants of auditor selection in terms of firm and IPO characteristics: Evidence from Bist. Journal of Accounting and Management, 7(1), 64-74.

Chi, H. Y., & Weng, T. C. (2014). Managerial legal liability and Big 4 auditor choice. Journal of Business Research, 67(9), 1857-1869.

Cho, C. C., & Wu, C. H. (2014). Role of auditor in agency conflict and corporate governance: Empirical analyses of Taiwanese firms. Chinese Management Studies, 8(3), 333-353.

Darmadi, S. (2016). Ownership concentration, family control, and auditor choice: Evidence from an emerging market. Asian Review of Accounting, 24(1), 19-42.

Dwekat, A., Mardawi, Z., & Abdeljawad, I. (2018). Corporate

governance and auditor quality choice: Evidence from Palestinian corporations. International Journal of Economics and Financial Issues, 8(2), 47-53.

Guedhami, O., Pittman, J. A., & Saffar, W. (2014). Auditor choice in politically connected firms. Journal of Accounting Research, 52(1), 107-162.

He, X., Rui, O., Zheng, L., & Zhu, H. (2014). Foreign ownership and auditor choice. Journal of Accounting and Public Policy, 33(4), 401-418.

Houqe, M. N., Van Zijl, T., Dunstan, K., & Karim, A. W. (2015). Corporate ethics and auditor choice–International evidence. Research in Accounting Regulation, 27(1), 57-65.

Hsu, H. H., Lin, C. H., & Tsao, S. M. (2018). Founding family and auditor choice: Evidence from Taiwan. Corporate Governance: An International Review, 26(2), 118-142.

Husnin, A. I., Nawawi, A., & Puteh Salin, A. S. A. (2016). Corporate governance and auditor quality–Malaysian evidence. Asian Review of Accounting, 24(2), 202-230.

Ianniello, G., Mainardi, M., & Rossi, F. (2013). Corporate governance and auditor choice. In Bicentenary Conference (pp. 1-23).

Karaibrahimoğlu, Y. Z. (2013). Is corporate governance a determinant of auditor choice?-Evidence from Turkey. Ege Akademik Bakış Dergisi, 13(2), 273-284.

Khan, A., Muttakin, M. B., & Siddiqui, J. (2015). Audit fees, auditor choice and stakeholder influence: Evidence from a family-firm dominated economy. The British Accounting Review, 47(3), 304-320.

Kulkani, R., & Maniam, B. (2014). Corporate Governance--Indian Perspective. International Journal of Trade, Economics and Finance, 5(4), 364-368.

Kumar, P., & Zattoni, A. (2014). Corporate governance, board of directors, and the firm: A maturing field. Corporate Governance: An International Review, 22(5), 365-366.

Libby, R., Rennekamp, K. M., & Seybert, N. (2015). Regulation and the interdependent roles of managers, auditors, and directors in earnings management and accounting choice. Accounting, Organizations and Society, 47(November), 25-42.

Lin, Z. J., & Liu, M. (2009). The impact of corporate governance on auditor choice: Evidence from China. Journal of International Accounting, Auditing and Taxation, 18(1), 44-59.

Makni, I., Kolsi, M. C., & Affes, H. (2012). The impact of corporate governance mechanisms on audit quality: Evidence from Tunisia. IUP Journal of Corporate Governance, 11(3), 48-70.

Matonti, G., Tucker, J., & Tommasetti, A. (2016). Auditor choice in Italian non-listed firms. Managerial Auditing Journal, 31(4/5), 458-491.

Nasrudin, W. A. W., Mohamed, N., & Shafie, N. A. (2017). Corporate Governance & Auditor Choice in Malaysia. In SHS Web of Conferences (Vol. 36, p.00007). EDP Sciences.

Olowookere, J. K., & Inneh, G. E. (2016). Determinants of external auditors choice in Nigerian quoted manufacturing companies. Kuwait Chapter of Arabian Journal of Business and Management Review, 5(9), 10-22.

Oxera Consulting Ltd. (2006). Competition and choice in the UK audit market. Retrieved from https://www.oxera.



Quick, R., Schenk, N., Schmidt, F., & Towara, T. (2018). The impact of corporate governance on auditor choice: Evidence from Germany. Journal of Management and Governance, 22(2), 251-283.

Soyemi, K. A. (2014). Clients’/Auditors’ attributes and external audit fees among listed nonfinancial companies in Nigeria. The Business & Management Review, 5(1), 131-140.

Soyemi, K. A. (2015a). Determinants of audit fees among Deposit Money Banks (DMBs) in Nigeria (Unpublished Ph.D. Thesis). Obafemi Awolowo University.

Soyemi, K. A. (2015b). Pricing of external audit services in Nigeria: A dynamic analysis. Ago-Iwoye Journal of Social and Behavioural Sciences, 4(1), 152-231.

Srinidhi, B. N., He, S., & Firth, M. (2014). The effect of governance on specialist auditor choice and audit fees in US family firms. The Accounting Review, 89(6), 2297-2329.

Suryanto, T., Thalassinos, E. J., & Thalassinos, I. E. (2017). Board Characteristics, Audit Committee and Audit Quality: The case of Indonesia. International Journal of Economics & Business Administration, 5(3), 47-57.

Wong, T. J. (2016). Corporate governance research on listed firms in China: Institutions, governance and accountability. Foundations and Trends® in Accounting, 9(4), 259-326.



Abstract 920  .
PDF downloaded 391  .