Audit committee effectiveness and non-audit service fees: Evidence from UK family firms

Jihad Al-Okaily and Nourhene BenYoussef

Journal of International Accounting, Auditing and Taxation, 2020, vol. 41, issue C

Abstract: This study examines whether the presence of an ineffective audit committee at family and non-family firms can influence the firms’ non-audit service purchases from the incumbent auditor. Using a sample of 1736 observations of UK-listed companies from 2005 to 2013, we find a significant positive association between ineffective audit committees and non-audit service fees. This association is more pronounced for family than for non-family firms, suggesting that in the UK, family firms with ineffective audit committees tend to buy more non-audit services from their incumbent auditors than non-family firms. The results also show that family firms with ineffective audit committees pay higher non-audit service fees when their family members own shares or hold board positions, indicating that both types of involvement lead to larger non-audit service expenditures.

Keywords: Agency problem; Audit committee; Auditor independence; Corporate governance; Family firms; Non-audit service fees; UK (search for similar items in EconPapers)
JEL-codes: G34 M41 M42 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:41:y:2020:i:c:s1061951820300574

DOI: 10.1016/j.intaccaudtax.2020.100356

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