Board Characteristics and Audit Fees

Carcello, Joseph V.; Hermanson, Dana R.; Neal, Terry L.; Riley, Richard A.

doi:10.2139/ssrn.231582

Cited by 302 publications

(624 citation statements)

References 27 publications

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“…Boards of directors with greater levels of independence, diligence and experience show a positive relationship with audit costs, which is consistent with the demand effect (Carcello, Hermanson, Neal & Riley Jr, 2000;Lifschutz, 2010).…”

Section: Determinants Of the Costs Of Audit Servicessupporting

confidence: 73%

Custos de auditoria e governança corporativa

Bortolon

Neto

Santos

2013

Rev. contab. finanç.

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The service provided by an independent audit is essential to the greater transparency and reliability of the financial reporting of public companies. The topics explored in the international literature include possible threats to the auditors' independence and the quality of their analysis, the cost of their services and their relationship with corporate governance mechanisms. The present study investigates this topic in the Brazilian context. This has become possible following CVM Instruction No. 480, which obligates the disclosure of the costs of audit and non-audit services contracted to independent audit firms. The information provided by 131 companies in the first half of 2010 was analyzed to determine the relationship between corporate governance and audit and non-audit service costs. The proxies for governance that were used are given as follows: the five largest shareholders rights mismatch, the participation in premium listing segments of the Brazilian Securities, Commodities, and Futures Exchange (Bolsa de Mercadoria e Futuros e Bolsa de Valores de São Paulo -BM&FBovespa), the existence of an audit committee and an internal audit department. The results point to a negative relationship between governance and audit costs, which suggests that the risk effect is predominant in the Brazilian market; that is, better governance practices reduce external audit's risks (legal and loss of reputation), thereby allowing them to charge less. Most studies in the international literature show a positive relationship in favor of the demand effect, but this is not consensual. According to this effect, better governance implies greater demands on the audit service, resulting in an increase in the fees charged. The relationship between non-audit service costs and good governance practices is also negative. Although studies have not shown that these costs can contribute to the loss of independence of the external audit, legislators and regulators tend to limit this practice.

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Section: Determinants Of the Costs Of Audit Servicessupporting

confidence: 73%

Custos de auditoria e governança corporativa

Bortolon

Neto

Santos

2013

Rev. contab. finanç.

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“…In addition to these four measures, in consonance with earlier studies, we use two measures to proxy board quality that can impact bank performance, namely (i) busyness of independent directors (Busy Director), measured by a dummy variable which equals 1 if board has at least one director holding three or more directorships 11 , capturing the commitment of outside directors (Ferris et al 2003;Sarkar and Sarkar 2009) and (ii) diligence of independent directors (Director Attendance), measured by the percentage of independent directors who attended the annual general meetings, capturing the extent of director participation in the activities of the firm (Carcello et al 2002;Sarkar et al 2008).…”

Section: Variables Of Interest: Board Characteristics and Ownership Dmentioning

confidence: 99%

Bank Ownership, Board Characteristics and Performance: Evidence from Commercial Banks in India

Sarkar

2018

IJFS

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Abstract:We study the effect of board governance in state-owned and private banks by undertaking a study of commercial banks in India that has both bank groups. Covering a ten-year period from 2003 to 2012 that witnessed a large number of governance reforms in India, the results of our empirical analysis provide evidence of strong ownership effects with board independence exhibiting a significant positive correlation with the performance of private banks and a significant but negative correlation with the performance of state-owned banks. The effect of CEO duality is negative in state-owned banks where incidence of CEO duality is high. We find that a longer CEO tenure has significant positive effects on bank outcomes with these effects strengthening in the later years of CEO tenure. Our results have governance implications for strengthening the composition of board of directors and CEO tenure especially in state-owned banks.

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“…Carcello et al (2002) relate AC activity, proxied by the frequency of meetings, to greater vigilance of the financial reporting process.…”

Section: Variablesmentioning

confidence: 99%

The effectiveness of the audit committee in Spain: implications of its existence on the auditor’s opinion

Suárez

García

Méndez

et al. 2012

SERIEs

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This research work is aimed at determining the effectiveness of the Audit Committee (AC), analyzing its impact on the reliability of accounting information issued by spanish listed companies. With this aim, we study whether certain features such as its voluntary or otherwise compulsory formation, its independence and activity lead to an improvement of financial reporting quality, which is defined as the removal of avoidable qualifications in the audit report. We considered the periods where ACs were voluntary (1998-2002) and compulsory (2003 onwards). The results obtained suggest that: (a) compulsory ACs are more effective than voluntary ones; (b) ACs with a higher proportion of independent members do not lead to greater improvements in the quality of accounting information; and (c) the number of meetings of the AC is directly related to improvements in the quality of accounting information.

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Board Characteristics and Audit Fees

Cited by 302 publications

References 27 publications

Custos de auditoria e governança corporativa

Custos de auditoria e governança corporativa

Bank Ownership, Board Characteristics and Performance: Evidence from Commercial Banks in India

The effectiveness of the audit committee in Spain: implications of its existence on the auditor’s opinion

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