Journal article
CEO Domination, Growth Opportunities, and their Impact on Audit Fees
Journal of Accounting Auditing and Finance, Vol.16(3), pp.189-208
2001
Abstract
This study examines the relationship between a firm's internal monitoring mechanism and its impact on the audit fee. The first hypothesis investigates whether firms with independent corporate boards (chief executive officer and chairman being separate individuals) provide a more effective internal monitoring mechanism and are thus associated with lower control risk, resulting in lower audit effort and fees as compared to nonindependent, CEO-dominated boards. The second hypothesis examines whether the effectiveness of the internal monitoring mechanism provided by independent corporate boards is independent of the firms' growth opportunities. High-growth firms are by nature more difficult to monitor due to the existence of discretionary investments and measurement problems associated with future assets. Thus, the negative association between independent corporate boards and audit fees is expected to be affected by a firm's growth. Results using 650 observations from Hong Kong companies provide support for both hypotheses.
Details
- Title
- CEO Domination, Growth Opportunities, and their Impact on Audit Fees
- Authors
- Judy S. L. Tsui (Author) - City University of Hong KongBikki Jaggi (Author) - City University of Hong KongFerdinand A. Gul (Author) - City University of Hong Kong
- Publication details
- Journal of Accounting Auditing and Finance, Vol.16(3), pp.189-208
- Publisher
- Sage Publications, Inc.
- DOI
- 10.1177/0148558X0101600303
- ISSN
- 2160-4061
- Organisation Unit
- University of the Sunshine Coast, Queensland; School of Business and Creative Industries
- Language
- English
- Record Identifier
- 99678893902621
- Output Type
- Journal article
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