The Effect of Ceo Characteristic on Big 4 Accounting Audit from Choice: Evidence from Listed Pharmaceutical Manufacturing

The study examined the effect of CEO characteristics on the selection of Big-4 audit firms among listed pharmaceutical companies in Nigeria. An ex-post facto research design was adopted, using secondary data collected from annual reports, regulatory filings, and company disclosures from 2010 to 2022. The population for the study comprises the six pharmaceutical manufacturing companies listed on the Nigerian Exchange Group (NGX). Given the small number of companies, the study employed a census sampling technique, utilizing the entire population for analysis. Logistic regression analysis was used to examine the data. The regression analysis revealed that CEO tenure and CEO ownership stakes significantly influence the choice of Big-4 auditors. CEO tenure demonstrated a negative relationship with the likelihood of selecting Big-4 auditors, with a coefficient of -0.739 (p-value = 0.018), suggesting that companies with longer-serving CEOs are less likely to engage Big-4 audit firms. In contrast, CEO ownership stakes exhibited a positive and significant relationship with Big-4 auditor selection, with a coefficient of 2.640 (p-value = 0.002), indicating that CEOs with ownership interests in their companies tend to prefer these prestigious audit firms. CEO gender also showed a significant effect on the choice of audit firm, with female CEOs more likely to select Big-4 auditors, as reflected by the coefficient of 6.512 (p-value = 0.005). On the other hand, CEO educational background and foreign nationality did not exhibit significant effects on the selection of Big-4 audit firms. CEO education had a negative coefficient of -0.908 (p-value = 0.486), and CEO foreign nationality was omitted from the regression model due to collinearity, suggesting that these characteristics do not substantially influence the choice of audit firms in this context. Additionally, firm size was positively related to the likelihood of engaging Big-4 auditors, with a coefficient of 3.036 (p-value = 0.002), highlighting that larger firms are more likely to engage Big-4 firms due to their financial standing and audit needs. Based on the findings of the study, firms should actively encourage gender diversity in leadership positions, as female CEOs were found to be more likely to engage Big 4 auditors. This could enhance corporate governance standards and improve transparency and accountability in the pharmaceutical sector. The positive relationship between CEO ownership and Big 4 auditor selection indicates that ownership interests play a significant role in driving governance quality.