The relationship between audit committees, compensation incentives and corporate audit fees in Pakistan

Sehrish Rustam, Kashif Rashid and Khalid Zaman ()

Economic Modelling, 2013, vol. 31, issue C, 697-716

Abstract: The objective of the study is to examine the association between audit committees, compensation incentives and corporate audit fees in Pakistan by using the data of fifty firms that are listed on the Karachi Stock Exchange (KSE), Pakistan during the years of 2007–2011. Panel data technique is used in this study, as the data set contains cross-sectional units over several time periods. Panel data control for cross sectional heterogeneity by observing individual firm and reduces the risk of biasness and collinearity among variables. The result of panel regression indicates that audit committee activity and committee member's independence are significantly associated to audit fee levels, consistent with the argument that audit committees complement the work of external auditors in monitoring management. In contrast, chief executive officers (CEO) pay incentives both short term and long term neither complement nor substitute for audit effort in disciplining Pakistan's firm management. Further results on the full sample of firms reveal significant differences in determinants of audit fees between the years examined. Finally, the results of control variables suggest a significant association between non-audit fee, board meetings, ROA (return on assets), sales and firm foreign operations with the audit fees in the selected market.

Keywords: Audit committees; Compensation incentives; Corporate audit fees; Panel regression; Pakistan (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999313000102
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:31:y:2013:i:c:p:697-716

DOI: 10.1016/j.econmod.2013.01.008

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().