 Board Turnover, Director Characteristics and Audit FeesEtienne Redor ()
Economics Bulletin, 2017, vol. 37, issue 4, 2446-2457 Abstract: Two competing theories correlate board characteristics and audit fees. The Audit-Risk Perspective suggests that there is a negative relationship between the quality of corporate governance and audit fees while, contrarily, the Demand-Based Perspective posits a positive relationship between these two variables. In this paper, I reexamine the relationship between corporate board characteristics and audit fees by analyzing whether auditors adjust their fees in response to board turnover. If the departure of an effective director reduces the quality of corporate governance, a change in the audit fees should be observed. I show that when the variables are individually included in the regressions, audit fees significantly go down only when an independent director or a female director leaves. The departure of other board members has no impact on audit fees. When both of these variables (independence and gender) are included in the model, a significant decrease in audit fees is observed only when an independent director leaves. On the basis of my analysis, I conclude that the Demand-Based Perspective is correct and that director independence is the most significant variable for explaining the changes in audit fees following a change in corporate board membership. Keywords: Audit committee; Board turnover; Audit fees; Director independence; Director gender; Director expertise. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-17-00153 Access Statistics for this article More articles in Economics Bulletin from AccessEcon |
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