Abstract
This study aims to examine the effect of CEO compensation, duality of managing director, and quality of internal organizational controls on audit fee. Audit fee is the written fee in the related financial statements; CEO compensation is extracted from the decisions in the public meeting session. Duality of managing director is simultaneous attribution of chief or vice presidency of CEO to one person obtained from CEO reports. To measure internal controls´ quality, reference of the auditor in his report to the significant internal control weaknesses was the basis. Using systematic random sampling, 91 firms listed in Tehran Stock Exchange from 2013-2015 were selected. For hypothesis test, panel regression model and Hausman test were used to select from combined models, fixed and random effects. Results showed a positive and significant correlation between natural logarithm of CEO compensation and audit fee. There was no significant correlation between duality of managing director, weakness of internal controls, and audit fee.
Highlights
Growing spread of communities and globalization of economy requires meeting various information needs
This study investigates the effect of CEO compensation, duality of managing director, and quality of internal controls on audit fee and other effective factors used as controls
This study examined the effect of CEO compensation, duality of managing director, and quality of internal controls on the audit fee, using regression method of Bryan and Mason (2016) as follows: LNAF = β0 + β1LNCom + β2CEO Dual + β3In-Con W + β4LNSize + β5RECTA + β6INVTA + β7CASH_FLOW + β8SPFIRM + β9LOSS + β10LEVERAGE + β11LIQ + β12ROA + β13RESIDENCE + β14BIG + β15FIRMTENURE + β16REPORTLAG + β17ΣIndustry + β18ΣYear + ε
Summary
Growing spread of communities and globalization of economy requires meeting various information needs. Earnings management is an active attempt with the aim of pretending earnings to seem natural in order to reach a desirable level In this regard, some incentives affecting stock price can include CEO payment, bonus increase, and preventing from loan contractsbreach. Prior studies showed that CEO compensation affects manipulating financial statements assessments by the management (Bergstresser & Philippon, 2006; Efendi, Srivastava, & Swanson, 2007; Jayaraman & Milbourn, 2014; Larcker, Richardson, & Tuna, 2007) In this respect, some studies have used audit fee to show that CEO compensation affects auditors’ perception about existing risk (Billings, Gao, & Jia, 2013; Chen, Gul, Veeraraghavan, & Zolotoy, 2003, Kannan, Skantz, & Higgs, 2014; Kim, Li, & Li, 2015). Internal control is an important part of managing an organization including plans, methods, and used organizational trends in reaching different
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
