Corporate governance mechanisms and audit pricing: evidence on ceo accounting expertise and audit committee independence in an emerging market
DOI:
https://doi.org/10.17230/Ad-minister.47.1Keywords:
Audit fees, CEO accounting expertise, Audit committee independenceAbstract
on audit fees, with a focus on listed firms in the Sultanate of Oman. Drawing on audit risk and corporate governance theories, the research investigates both the individual and interactive effects of these governance mechanisms on audit pricing. While previous studies have explored these relationships in developed economies, limited empirical evidence exists for emerging markets, particularly in the Gulf Cooperation Council (GCC) region. This study addresses this gap by analyzing a sample of 1,313 firm-year observations from companies listed on the Muscat Stock Exchange. Using multiple linear regression models, the analysis tests the direct effects of CEO accounting expertise and audit committee independence, as well as their interaction, on audit fees. The results reveal that CEO accounting expertise is negatively associated with audit fees, suggesting that CEOs with financial knowledge reduce auditors' perceived engagement risk. In contrast, audit committee independence shows a marginally positive relationship with audit fees, indicating a demand for higher audit assurance. Importantly, the interaction between CEO expertise and audit committee independence is positively and significantly related to audit fees, implying that auditors respond to dual-layered governance strength with increased audit effort and cost. This study contributes to the literature by offering new insights into how governance dynamics influence audit pricing in an emerging market context. The findings have implications for auditors, boards, and policymakers seeking to enhance audit quality and governance effectiveness within Oman and similar institutional settings.
Downloads
References
Abbott, L. J., Parker, S., Peters, G. F., & Raghunandan, K. (2003). The association between audit committee characteristics and audit fees. Auditing: A Journal of Practice & Theory, 22(2), 17–32. https://doi.org/10.2308/aud.2003.22.2.17
Alajmi, J., Dennis, D., & Alhabshi, S. (2009). Audit fees in the Gulf Cooperation Council (GCC): The case of Kuwait. Managerial Auditing Journal, 24(1), 7–33. https://doi.org/10.1108/02686900910919983
Al-Busaidi, M., & Khan, M. N. A. (2019). Corporate governance and firm performance: Evidence from Oman. International Journal of Economics and Financial Issues, 9(3), 294–300. https://doi.org/10.32479/ijefi.7927
Ali, M. J., Singh, R. K. S., & Al-Akra, M. (2018). The impact of audit committee effectiveness on audit fees and non-audit service fees: Evidence from Australia. Accounting Research Journal, 31(3), 361–382. https://doi.org/10.1108/ARJ-11-2015-0144
Alqatamin, R. M., Aribi, Z. A., & Arun, T. (2020). The effect of corporate governance on audit fees: Evidence from Jordan. Journal of Financial Reporting and Accounting, 18(1), 139–157. https://doi.org/10.1108/JFRA-10-2017-0086
Bryan, D. B., & Mason, T. W. (2016). Extreme CEO pay cuts and audit fees. Advances in Accounting, 33, 1–10. https://doi.org/10.1016/j.adiac.2016.04.001
Carcello, J. V., Hermanson, D. R., Neal, T. L., & Riley Jr, R. A. (2002). Board characteristics and audit fees. Contemporary Accounting Research, 19(3), 365–384. https://doi.org/10.1506/CHWK-GMQ0-MLKE-K03V
Chen, Y., Gul, F. A., Veeraraghavan, M., & Zolotoy, L. (2015). Executive equity risk-taking incentives and audit pricing. The Accounting Review, 90(6), 2205–2234. https://doi.org/10.2308/accr-51082
Goodwin‐Stewart, J., & Kent, P. (2006). Relation between external audit fees, audit committee characteristics and internal audit. Accounting & Finance, 46(3), 387–404. https://doi.org/10.1111/j.1467-629X.2006.00174.x
Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2), 193–206. https://doi.org/10.5465/amr.1984.4277628
Harjoto, M. A., Laksmana, I., & Lee, R. (2015). The impact of demographic characteristics of CEOs and directors on audit fees and audit delay. Managerial Auditing Journal, 30(8/9), 963–997. https://doi.org/10.1108/MAJ-02-2015-1156
Hay, D. C., Knechel, W. R., & Wong, N. (2006). Audit fees: A meta-analysis of the effect of supply and demand attributes. Contemporary Accounting Research, 23(1), 141–191. https://doi.org/10.1506/4XR4-KT5V-E8CN-91GX
Johl, S., Subramaniam, N., & Zain, M. M. (2012). Audit committee and CEO ethnicity and audit fees: Some Malaysian evidence. The International Journal of Accounting, 47(3), 302–332. https://doi.org/10.1016/j.intacc.2012.07.002
Kalelkar, R., & Khan, S. (2016). CEO financial background and audit pricing. Accounting Horizons, 30(3), 325–339. https://doi.org/10.2308/acch-51463
Krishnan, J., & Lee, J. E. (2008). Audit committee financial expertise, litigation risk, and corporate governance. The Accounting Review, 83(6), 241–273. https://doi.org/10.2308/accr.2008.83.6.241
Muniandy, B. (2007). CEO duality, audit committee effectiveness and audit risks: A study of the Malaysian market. Managerial Auditing Journal, 22(7), 716–728. https://doi.org/10.1108/02686900710772609
Rezaee, Z., Asiaei, K., & Safdel Delooie, T. (2021). Are CEO experience and financial expertise associated with financial restatements? Revista de Contabilidad – Spanish Accounting Review, 24(2), 270–281. https://doi.org/10.6018/rcsar.379991
Simunic, D. A. (1980). The pricing of audit services: Theory and evidence. Journal of Accounting Research, 18(1), 161–190. https://doi.org/10.2307/2490397
Additional Files
Published
Versions
- 2025-12-31 (4)
- 2026-05-13 (3)
- 2026-05-13 (2)
- 2026-01-16 (1)
Issue
Section
License
Copyright (c) 2026 AD-minister
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
a. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under aCreative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
b. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
c. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
