Audit effort and fees under concentrated client ownership: Evidence from four international audit firms

Niemi, Lasse

doi:10.1016/j.intacc.2005.09.006

Cited by 99 publications

(134 citation statements)

References 35 publications

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“…Furthermore, foreign ownership requires more control over its management because of conflict of interest between management of subsidiaries and the owner of foreign companies (Niemi, 2005). This finding supported the one of Nelson & Rusdi (2015).…”

Section: 3foreign Ownership On Audit Feessupporting

confidence: 76%

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Ownership structures and characteristics influence on audit fee

Harahap¹,

Prasetyo²

2018

Pressacademia

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Purpose -The purpose of this paper was to investigate the influence of the structures and characteristics of corporate ownership on audit fees paid to external auditors by Indonesian companies listed on Indonesian Stock Exchange (ISE). Methodology -The population of this research was non-financial companies listed in Indonesia Stock Exchange during the period of 2014-2016 that were sampled using purposive sampling method resulted in 150 companies met the criteria. Data collected were then analyzed using multiple linear regression analysis. The dependent variable was the level of audit fees charged to the client by an external audit represented as AFEE, measured in the Indonesia rupiah. Meanwhile, the independent variables were ownership structure of the company consisted of: (1) managerial ownership, (2) foreign ownership, (3) government ownership; and characteristics structure, which is divided into: (4) complexity, (5) current ratio, (6) leverage, ( 7) profitability. Findings-The results showed that firms with larger foreign ownership, on government ownership, and on profitability significantly and positively affected audit fees, but higher managerial ownership significantly and negatively affected firms with audit fees. The results also showed the insignificant relationship between complexity, current ratio and leverage and audit fees. Conclusion-Managerial Ownership, Foreign ownership, government ownership, and profitability influence on audit fee for external auditor.

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Section: 3foreign Ownership On Audit Feessupporting

confidence: 76%

“…Client's complexity variables are proxy using inventory and account receivables divided by total assets (Niemi, 2005). In doing the auditing, external auditors need more time and effort to understand the client's business operations that in return affect the audit cost which will be higher.…”

Section: Complexity On Audit Feesmentioning

confidence: 99%

Ownership structures and characteristics influence on audit fee

Harahap¹,

Prasetyo²

2018

Pressacademia

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“…Niemi (2005) concludes that audit costs are lower in companies in which the managers have a majority stake than in subsidiaries of foreign firms. Variables that are indicative of the type of controller (managers, foreign or government) increase the explanatory power of the models, and in Finland, the importance of the identity of the controlling shareholder in determining the audit costs has been demonstrated.…”

Section: Determinants Of the Costs Of Audit Servicesmentioning

confidence: 99%

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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“…The review of prior literature shows that most of the studies that examine the effect of corporate governance attributes on the firm value have used at least one type of ownership structure or corporate governance index (CGI) as a proxy for corporate governance, such as Niemi (2005) in Finland, Mitra et al (2007) in the USA, Cheung et al (2011) in Hong Kong, and Adelopo et al (2012) in the UK.…”

Section: Literature Reviewmentioning

confidence: 99%

The effects of corporate governance attributes and code amendments on the performance of Malaysian trading and services firms

Mohamad

Alom²,

Laallam

2017

IJEBR

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This study aims to investigate the impact of corporate governance attributes and code amendments of 2012 on the performance of 162 trading and services listed firms in Bursa Malaysia. A corporate governance index score adopted from the Taylor model and formulated based on the MCCG best practices is used to measure the corporate governance attribute's level. Return on assets (ROA), return on equity (ROE) and market return measurement (Tobin's Q) are used in this study. A panel data test has been conducted followed by post hoc test in order to assess the changes in firm's performance throughout the period 2010-2014. The findings show a positive significant relationship between corporate governance attributes and firm performance for accounting and market-based proxies. While the relationship between the corporate governance amendment (CGA) and accounting based firm performance proxies ROA and ROE turns out to be negatively significant with market-based firm performance proxy TQ.

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Audit effort and fees under concentrated client ownership: Evidence from four international audit firms

Cited by 99 publications

References 35 publications

Ownership structures and characteristics influence on audit fee

Ownership structures and characteristics influence on audit fee

Custos de auditoria e governança corporativa

The effects of corporate governance attributes and code amendments on the performance of Malaysian trading and services firms

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