The Impact of Corporate Governance Efficiency on the Relationship between Managerial Ability and Audit Fees Evidence from Listed Companies in the Egyptian Stock Exchange

The research aimed to study and test the relationship between the managerial ability score and audit fees, and to test the effect of corporate governance efficiency on this relationship.
To achieve this goal, an empirical study was conducted on non-financial companies that listed in the Egyptian Stock Exchange for the period from 2014 to 2019, to test the relationship between managerial ability score and audit fees, in light of the efficiency of corporate governance as a moderating variable, with controlling variables which are the size of the company, the degree of financial leverage, the rate of return on assets. In addition to the audit firm size and the industrial sector as additional control variables.
The researcher found that the managerial ability score in the majority of listed companies in the Egyptian Stock Exchange had low score, reaching an average of approximately 9%. She also found the difficulty of explaining the behavior of audit fees in the Egyptian audit firms. This makes it difficult to determine their determinants.
The researcher also found an evidence about the inverse relationship between managerial ability score and audit fees in listed companies in the Egyptian Stock Exchange but not significant. This result was inhanced by conducting additional and sensitivity analysis.
It was also found that the efficiency of corporate governance affected on the relationship between the managerial ability and audit fees. Because the statistical indicators changed by introducing the efficiency of corporate governance as a moderating variable that measures the degree of corporate governance compliance, but this effect was not significant, because the level of corporate governance efficiency in companies listed in Egyption exchange is weak, which reached an average of about 39.8%.
Based on the results obtained, the researcher recommends that the managerial ability score should be taken into consideration when pricing the audit service and considered one of the determinants of audit fees in Egypt.