The Effect of Regulatory Oversight on the Association Between Internal Governance Characteristics and Audit Fees

Posted: 12 Nov 2007 Last revised: 19 Dec 2007

See all articles by El'fred Boo

El'fred Boo

Nanyang Business School, Nanyang Technological University

Divesh Sharma

Kennesaw State University, School of Accountancy

Abstract

We examine the relationship between internal governance, external audit monitoring and regulatory oversight for a sample comprising industrial companies and financial/utility companies subject to additional industry-specific regulation. Our results indicate that the association between audit fees and board/audit committee (i) independence and (ii) size are weaker for regulated companies. These observations are consistent with the notion that regulatory oversight partially substitutes the external audit as a monitoring mechanism. Boards/audit committees with more multiple directorships, however, demand a more extensive audit in the presence of regulatory oversight to protect their reputation capital. Our study enhances our understanding of the complex relationships amongst the major corporate governance elements.

Keywords: Audit fees, Internal and external governance, Regulatory oversight

JEL Classification: G34, M49, G38, N40, L90

Suggested Citation

Boo, El'fred Hian Yong and Sharma, Divesh Shankar, The Effect of Regulatory Oversight on the Association Between Internal Governance Characteristics and Audit Fees. Accounting & Finance, Vol. 47, 2007, Available at SSRN: https://ssrn.com/abstract=982504

El'fred Hian Yong Boo (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

Divesh Shankar Sharma

Kennesaw State University, School of Accountancy ( email )

Kennesaw, GA 30144
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,072
PlumX Metrics