The impact of board reforms on audit fees: International evidence
Incheol Kim,
Joon Ho Kong and
Rong Yang
Journal of Business Finance & Accounting, 2024, vol. 51, issue 1-2, 45-83
Abstract:
In this study, we investigate whether and to what extent country‐level board reforms affect audit pricing decisions. We find audit fees are positively associated with board reforms. An increase in audit fees is more pronounced for firms that switched up to Big N auditors following board reforms. After board reforms, firms are less likely to issue restatements, and both analyst forecast accuracy and management forecast frequency increase, indicating improved audit quality and information transparency in the postreform period. Moreover, the positive relation between board reforms and audit fees is more evident for firms in countries that lack institutional governance mechanisms, captured by emerging capital markets, high political risk, weak governmental enforcement actions and low corporate governance quality. Overall, our findings broadly support the view that audit fees increase upon demand for better audit quality.
Date: 2024
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https://doi.org/10.1111/jbfa.12685
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jbfnac:v:51:y:2024:i:1-2:p:45-83
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