Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria

Ajayi-Owoeye Ayooluwa Olotu; Akinwunmi Abiodun Jelil; Adegbie Folajimi Festus

doi:doi:10.11648/j.jfa.20200801.12

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Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria

Ajayi-Owoeye Ayooluwa Olotu, Akinwunmi Abiodun Jelil, Adegbie Folajimi Festus

Published in Journal of Finance and Accounting (Volume 8, Issue 1)

Received: 25 December 2019 Accepted: 10 January 2020 Published: 10 February 2020

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Abstract

The debate on the need for ownership of shares by management emanates as a result of the possible incongruence of objective that could happen among business executives and diverse shareholders when directors do not have shareholding stake in the companies they govern. Studies have shown that financial crisis reported across the global economy affect the credibility of financial information and confidence of stakeholders in quoted firms. This study examined the managerial ownership impact on audit quality of firms quoted on the Nigerian Stock Exchange from 2007 to 2017. The sample size was 36 manufacturing companies purposively selected from 185 firms listed on the NSE. The study used descriptive, correlational and experimental designs and multiple regressions for analysis. It was found that managerial ownership does not have a positive and significant impact on audit fees (β = -0.241; p = 0.287) while managerial ownership structure has a negative but significant impact on audit size (β = -0.562; p- value = 0.002). The study concluded that managerial ownership has significant influence on audit quality of Nigerian quoted firms. The study recommended that, boards of corporate organisations in Nigeria should hearten greater participation of executive directors in taking up some of the shares of the companies they preside over in order to promote convergence of interest in achieving overall corporate objective.

Published in	Journal of Finance and Accounting (Volume 8, Issue 1)
DOI	10.11648/j.jfa.20200801.12
Page(s)	9-17
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Audit Fees, Audit Size, Convergence of Interest, Corporate Governance, Managerial Ownership

References

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APA Style

Ajayi-Owoeye Ayooluwa Olotu, Akinwunmi Abiodun Jelil, Adegbie Folajimi Festus. (2020). Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria. Journal of Finance and Accounting, 8(1), 9-17. https://doi.org/10.11648/j.jfa.20200801.12

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ACS Style

Ajayi-Owoeye Ayooluwa Olotu; Akinwunmi Abiodun Jelil; Adegbie Folajimi Festus. Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria. J. Finance Account. 2020, 8(1), 9-17. doi: 10.11648/j.jfa.20200801.12

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AMA Style

Ajayi-Owoeye Ayooluwa Olotu, Akinwunmi Abiodun Jelil, Adegbie Folajimi Festus. Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria. J Finance Account. 2020;8(1):9-17. doi: 10.11648/j.jfa.20200801.12

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@article{10.11648/j.jfa.20200801.12,
  author = {Ajayi-Owoeye Ayooluwa Olotu and Akinwunmi Abiodun Jelil and Adegbie Folajimi Festus},
  title = {Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria},
  journal = {Journal of Finance and Accounting},
  volume = {8},
  number = {1},
  pages = {9-17},
  doi = {10.11648/j.jfa.20200801.12},
  url = {https://doi.org/10.11648/j.jfa.20200801.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20200801.12},
  abstract = {The debate on the need for ownership of shares by management emanates as a result of the possible incongruence of objective that could happen among business executives and diverse shareholders when directors do not have shareholding stake in the companies they govern. Studies have shown that financial crisis reported across the global economy affect the credibility of financial information and confidence of stakeholders in quoted firms. This study examined the managerial ownership impact on audit quality of firms quoted on the Nigerian Stock Exchange from 2007 to 2017. The sample size was 36 manufacturing companies purposively selected from 185 firms listed on the NSE. The study used descriptive, correlational and experimental designs and multiple regressions for analysis. It was found that managerial ownership does not have a positive and significant impact on audit fees (β = -0.241; p = 0.287) while managerial ownership structure has a negative but significant impact on audit size (β = -0.562; p- value = 0.002). The study concluded that managerial ownership has significant influence on audit quality of Nigerian quoted firms. The study recommended that, boards of corporate organisations in Nigeria should hearten greater participation of executive directors in taking up some of the shares of the companies they preside over in order to promote convergence of interest in achieving overall corporate objective.},
 year = {2020}
}

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TY  - JOUR
T1  - Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria
AU  - Ajayi-Owoeye Ayooluwa Olotu
AU  - Akinwunmi Abiodun Jelil
AU  - Adegbie Folajimi Festus
Y1  - 2020/02/10
PY  - 2020
N1  - https://doi.org/10.11648/j.jfa.20200801.12
DO  - 10.11648/j.jfa.20200801.12
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 9
EP  - 17
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20200801.12
AB  - The debate on the need for ownership of shares by management emanates as a result of the possible incongruence of objective that could happen among business executives and diverse shareholders when directors do not have shareholding stake in the companies they govern. Studies have shown that financial crisis reported across the global economy affect the credibility of financial information and confidence of stakeholders in quoted firms. This study examined the managerial ownership impact on audit quality of firms quoted on the Nigerian Stock Exchange from 2007 to 2017. The sample size was 36 manufacturing companies purposively selected from 185 firms listed on the NSE. The study used descriptive, correlational and experimental designs and multiple regressions for analysis. It was found that managerial ownership does not have a positive and significant impact on audit fees (β = -0.241; p = 0.287) while managerial ownership structure has a negative but significant impact on audit size (β = -0.562; p- value = 0.002). The study concluded that managerial ownership has significant influence on audit quality of Nigerian quoted firms. The study recommended that, boards of corporate organisations in Nigeria should hearten greater participation of executive directors in taking up some of the shares of the companies they preside over in order to promote convergence of interest in achieving overall corporate objective.
VL  - 8
IS  - 1
ER  -

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Author Information

Ajayi-Owoeye Ayooluwa Olotu

Department of Accounting, School of Management Sciences, Babcock University, Ilishan Remo, Nigeria
Akinwunmi Abiodun Jelil

Department of Accounting, School of Management Sciences, Babcock University, Ilishan Remo, Nigeria
Adegbie Folajimi Festus

Department of Accounting, School of Management Sciences, Babcock University, Ilishan Remo, Nigeria

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APA Style

Ajayi-Owoeye Ayooluwa Olotu, Akinwunmi Abiodun Jelil, Adegbie Folajimi Festus. (2020). Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria. Journal of Finance and Accounting, 8(1), 9-17. https://doi.org/10.11648/j.jfa.20200801.12

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ACS Style

Ajayi-Owoeye Ayooluwa Olotu; Akinwunmi Abiodun Jelil; Adegbie Folajimi Festus. Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria. J. Finance Account. 2020, 8(1), 9-17. doi: 10.11648/j.jfa.20200801.12

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AMA Style

Ajayi-Owoeye Ayooluwa Olotu, Akinwunmi Abiodun Jelil, Adegbie Folajimi Festus. Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria. J Finance Account. 2020;8(1):9-17. doi: 10.11648/j.jfa.20200801.12

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@article{10.11648/j.jfa.20200801.12,
  author = {Ajayi-Owoeye Ayooluwa Olotu and Akinwunmi Abiodun Jelil and Adegbie Folajimi Festus},
  title = {Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria},
  journal = {Journal of Finance and Accounting},
  volume = {8},
  number = {1},
  pages = {9-17},
  doi = {10.11648/j.jfa.20200801.12},
  url = {https://doi.org/10.11648/j.jfa.20200801.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20200801.12},
  abstract = {The debate on the need for ownership of shares by management emanates as a result of the possible incongruence of objective that could happen among business executives and diverse shareholders when directors do not have shareholding stake in the companies they govern. Studies have shown that financial crisis reported across the global economy affect the credibility of financial information and confidence of stakeholders in quoted firms. This study examined the managerial ownership impact on audit quality of firms quoted on the Nigerian Stock Exchange from 2007 to 2017. The sample size was 36 manufacturing companies purposively selected from 185 firms listed on the NSE. The study used descriptive, correlational and experimental designs and multiple regressions for analysis. It was found that managerial ownership does not have a positive and significant impact on audit fees (β = -0.241; p = 0.287) while managerial ownership structure has a negative but significant impact on audit size (β = -0.562; p- value = 0.002). The study concluded that managerial ownership has significant influence on audit quality of Nigerian quoted firms. The study recommended that, boards of corporate organisations in Nigeria should hearten greater participation of executive directors in taking up some of the shares of the companies they preside over in order to promote convergence of interest in achieving overall corporate objective.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - Convergence of Interest Hypothesis: Examining the Impact of Managerial Ownership on Audit Quality of Quoted Manufacturing Companies in Nigeria
AU  - Ajayi-Owoeye Ayooluwa Olotu
AU  - Akinwunmi Abiodun Jelil
AU  - Adegbie Folajimi Festus
Y1  - 2020/02/10
PY  - 2020
N1  - https://doi.org/10.11648/j.jfa.20200801.12
DO  - 10.11648/j.jfa.20200801.12
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 9
EP  - 17
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20200801.12
AB  - The debate on the need for ownership of shares by management emanates as a result of the possible incongruence of objective that could happen among business executives and diverse shareholders when directors do not have shareholding stake in the companies they govern. Studies have shown that financial crisis reported across the global economy affect the credibility of financial information and confidence of stakeholders in quoted firms. This study examined the managerial ownership impact on audit quality of firms quoted on the Nigerian Stock Exchange from 2007 to 2017. The sample size was 36 manufacturing companies purposively selected from 185 firms listed on the NSE. The study used descriptive, correlational and experimental designs and multiple regressions for analysis. It was found that managerial ownership does not have a positive and significant impact on audit fees (β = -0.241; p = 0.287) while managerial ownership structure has a negative but significant impact on audit size (β = -0.562; p- value = 0.002). The study concluded that managerial ownership has significant influence on audit quality of Nigerian quoted firms. The study recommended that, boards of corporate organisations in Nigeria should hearten greater participation of executive directors in taking up some of the shares of the companies they preside over in order to promote convergence of interest in achieving overall corporate objective.
VL  - 8
IS  - 1
ER  -

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