Board characteristics and audit fees

• 成果类型: Article
• 署名作者: Carcello, JV; Hermanson, DR; Neal, TL; Riley, RA Jr
• 署名单位: University of Tennessee System; University of Tennessee Knoxville; University of Kentucky; West Virginia University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1506/CHWK-GMQ0-MLKE-K03V
• 发表日期: 2002
• 页码: 365-384
• 关键词: agency problems; OWNERSHIP; firm; LITIGATION

摘要

This paper examines the relations between three board characteristics (independence, diligence, and expertise) and Big 6 audit fees for Fortune 1000 companies. To protect its reputation capital, avoid legal liability, and promote shareholder interests, a more independent, diligent, and expert board may demand differentially higher audit quality (greater assurance, which requires more audit work) than the Big 6 audit firms normally provide. The audit fee increases as the auditor's additional costs are passed on to the client, such that we expect positive relations between audit fees and the board characteristics examined. We find significant positive relations between audit fees and board independence, diligence, and expertise. The results persist when similar measures of audit committee quality are included in the model. The results add to the growing body of literature documenting relations between corporate governance mechanisms and various facets of the financial reporting and audit processes, as well as to our understanding of the determinants of audit fees.