Blockholder Heterogeneity and Audit Fees: Does Private Information Matter?

Raúl Barroso (raul.barroso@univ-lille.fr), Chiraz Ben Ali, Cédric Lesage and Daniel Oyon
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Raúl Barroso: LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique
Chiraz Ben Ali: John Molson School of Business, Concordia University, Montreal
Cédric Lesage: John Molson School of Business, Concordia University, Montreal
Daniel Oyon: UNIL - Université de Lausanne = University of Lausanne

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Abstract: We analyze the impact of Small Blockholders' (SBH – with 5% to 10% of voting rights) heterogeneity and their access to private information on the demand for audit services. By promoting enhanced audit services, we expect SBH to have a moderating effect on the relation between Large Blockholders (LBH – more than 10% of voting rights) and audit fees in a context of low shareholder protection. Drawn on Swiss public firm data over the 2002–2019 period, our results show that the presence of SBH flattens the concave relation between ownership concentration and audit fees found in prior studies. This moderating effect is mainly driven by the uninformed SBH, who given their lower – compared with informed SBH – access to private channels of information, are more likely to rely on audited public financial statements. Our findings contribute to the literature on the role of SBH in the company's corporate governance.

Keywords: 2022-07-24 Audit Fees; Blockholder Heterogeneity; Small Blockholders SBH; Principal-Principal Conflict; Agency Theory (search for similar items in EconPapers)
Date: 2022-07-24
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Published in Accounting in Europe, 2022, pp.1-36. ⟨10.1080/17449480.2022.2091465⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03975026

DOI: 10.1080/17449480.2022.2091465

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