Auditors and the Principal-Principal Agency Conflict in Family Controlled Firms

C.B. Ali, Sabri Boubaker and M. Magnan

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Abstract: This paper examines whether multiple large shareholders (MLS) affect audit fees in firms where the largest controlling shareholder (LCS) is a family. Results show that there is a negative relationship between audit fees and the presence, number, and voting power of MLS. This is consistent with the view that auditors consider MLS as playing a monitoring role over the LCS, mitigating the potential for expropriation by the LCS. Therefore, our evidence suggests that auditors reduce their audit risk assessment and audit effort and ultimately audit fees in family controlled firms with MLS. © 2020, American Accounting Association. All rights reserved.

Keywords: Audit fee; Corporate governance; Multiple large shareholders; Private benefits of control (search for similar items in EconPapers)
Date: 2020
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Published in Auditing: A Journal of Practice and Theory, 2020, 39 (4), pp.31--55. ⟨10.2308/AJPT-17-147⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04457114

DOI: 10.2308/AJPT-17-147

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