The Relationship Between Governance Structure and Audit Fees Pre‐Cadbury: some empirical findings

Peel, Michael J.; Clatworthy, Mark

doi:10.1111/1467-8683.00256

Cited by 38 publications

(32 citation statements)

References 25 publications

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“…Hence, in common with previous studies of the UK quoted sector (Ezzamel et al, 1996; and Peel and Clatworthy, 2001), there is no evidence of ‘knowledge spill‐overs’ between audit and consultancy services leading to lower audit fees in the university sector. Rather what has been described as the puzzling positive association between audit and consultancy in the quoted corporate sector (Firth, 1997; and Peel and Clatworthy, 2001), also appears to hold in the UK university sector.…”

Section: Resultssupporting

confidence: 76%

Audit Fee Determinants in the Uk University Sector

2007

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Section: Resultssupporting

confidence: 76%

Audit Fee Determinants in the Uk University Sector

2007

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“…In this context some previous studies have examined the impact of non-audit fees on audit fees, and found, contrary to the knowledge spill-over hypothesis, that a positive relationship exists for quoted firms (e.g., Ezzamel et al, 1996;Peel and Clatworthy, 2001). This data was unavailable on FAME.…”

Section: Resultsmentioning

confidence: 91%

Audit fee determinants and auditor premiums: evidence from the micro-firm sub-market

Peel

Roberts

2003

Accounting and Business Research

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Despite the growing literature on the market for audit services, to date no study has examined the determinants of audit fees for the smallest auditees in the market. This study therefore provides some new theory and evidence on the determinants of the audit fees of micro-firms operating in the UK manufacturing sector. A key finding of the study is that in the highly competitive market under consideration, independent small auditees willingly paid a premium to be audited by a mid-tier or a (then) Big Six auditor, with the latter commanding the higher premium. It is concluded that these findings are consistent with Big Six (and, to a lesser extent, mid-tier) auditors commanding a brand premium stemming from the (perceived) higher quality audit conducted by large auditors, for which small firms are willing to pay a premium in order to benefit from associated 'reputational' and 'signalling' effects. The common finding that the explanatory power of audit fee models declines as a function of firm size is also examined. The empirical analysis confirms this effect, but evidence is offered that, rather than resulting from model misspecification, it is likely that audit prices of the smallest auditees are relatively insensitive to variations in corporate size, which may result from lower incremental economies of scale and minimum pricing.

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“…They find large audit firms significantly increased their market share over this period via mergers, but that significant fee discounting in the 1980s does not persist in the 1990s. Peel and Clatworthy (2001), examining audit fees in the pre‐Cadbury (1992) period, find no significant evidence that board structure variables – including chairman/chief executive officer split and the proportion of non‐executive directors on the board – impact significantly on external audit fees.…”

Section: Background and Hypotheses Developmentmentioning

confidence: 99%

Corporate Governance Quality, Audit Fees and Non‐Audit Services Fees

Zaman

Hudaib

Haniffa

2011

Business Fin & Account

262

233

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This paper extends prior research on the relationship between governance quality and auditor remuneration. We examine the influence of audit committee effectiveness (ACE), a proxy for governance quality, on audit fees (AF) and non-audit services fees (NASF) using a new composite measure comprising audit committee independence, expertise, diligence and size. We find that after controlling for board of director characteristics, there is a significant positive association between ACE and AF only for larger clients. Our results indicate that effective audit committees undertake more monitoring which results in wider audit scope and higher audit fees. Contrary to our expectations, we find the association between ACE and NASF to be positive and significant, especially for larger clients. This suggests that larger clients are more likely to purchase non-audit services (NAS) even in the presence of effective audit committees probably due to the complexity of their activities. Overall, our findings support regulatory initiatives aimed at improving corporate governance quality.

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The Relationship Between Governance Structure and Audit Fees Pre‐Cadbury: some empirical findings

Cited by 38 publications

References 25 publications

Audit Fee Determinants in the Uk University Sector

Audit Fee Determinants in the Uk University Sector

Audit fee determinants and auditor premiums: evidence from the micro-firm sub-market

Corporate Governance Quality, Audit Fees and Non‐Audit Services Fees

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