The Impact of Related Party Transactions on Audit Fees: Evidence from Companies Listed on the Tehran Stock Exchange

Saeed Alipour ()
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Saeed Alipour: Assistant Professor, Department of Accounting, Ardabil Branch, Islamic Azad University, Ardabil, Iran

New Challenges in Accounting and Finance, 2025, vol. 14, 33-45

Abstract: This study examines the relationship between Related Party Transactions (RPTs) and audit fees in 163 companies listed on the Tehran Stock Exchange over 2014–2024. Despite extensive literature suggesting that RPTs increase audit risk and may affect audit pricing, our findings indicate that in the Iranian context, RPTs do not exert a statistically significant influence on audit fees. Using a panel multivariate regression model controlling for firm- and auditor-specific characteristics, the analysis reveals that other financial and audit attributes such as client importance, firm size, leverage, and auditor characteristics play a more decisive role in determining audit fees. These results diverge from some international evidence and highlight the distinctive institutional environment in Iran, characterized by concentrated ownership, government influence, limited audit market competition, and relatively weak corporate governance mechanisms. The study underscores that audit fees in Iran appear to primarily reflect auditors’ efforts to maintain general audit quality rather than respond to the presence or volume of related party transactions. Implications for policy and practice include the need to strengthen governance mechanisms, improve transparency in financial reporting, and assess how institutional context moderates the interplay between RPTs and audit processes.

Keywords: Related Party Transactions; Audit Fees; Audit Quality; Corporate Governance; Tehran Stock Exchange (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bco:ncafaa::v:14:y:2025:p:33-45

DOI: 10.32038/NCAF.2025.14.03

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