Finance Faculty Publications and Presentations
Document Type
Article
Publication Date
1-2-2023
Abstract
In this study, we investigate whether and to what extent country-level board reforms affect audit pricing decisions. We find audit fees are positively associated with board reforms. An increase in audit fees is more pronounced for firms that switched up to Big N auditors following board reforms. After board reforms, firms are less likely to issue restatements, and both analyst forecast accuracy and management forecast frequency increase, indicating improved audit quality and information transparency in the postreform period. Moreover, the positive relation between board reforms and audit fees is more evident for firms in countries that lack institutional governance mechanisms, captured by emerging capital markets, high political risk, weak governmental enforcement actions and low corporate governance quality. Overall, our findings broadly support the view that audit fees increase upon demand for better audit quality.
Publication Title
Journal of Business Finance and Accounting
DOI
10.1111/jbfa.12685
Recommended Citation
Kim, I., Kong, J. H., & Yang, R. (2023). The impact of board reforms on audit fees: International evidence. Journal of Business Finance & Accounting, 00, 1– 39. https://doi.org/10.1111/jbfa.12685
Comments
Original published version available at https://onlinelibrary.wiley.com/share/X6XQPFR3ZU9BF8MI88ND?target=10.1111/jbfa.12685