Corporate governance mechanisms and audit pricing: evidence on ceo accounting expertise and audit committee independence in an emerging market
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Keywords
Audit fees, CEO accounting expertise, Audit committee independence
Abstract
This study examines the influence of CEO accounting expertise and audit committee independence 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.
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khaled Salmen Aljaaidi, Prince Sattam bin Abdulaziz University
Department of Accounting. College of Business Administration. Prince Sattam bin Abdulaziz University Saudi Arabia Email: k.aljaaidi@psau.edu.sa
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