Neural Networks: Is it Hermeneutic?

Abstract

This paper proposes a synoptic methodology to evaluate the determinants of audit fees by utilising Neural Networks. First, a brief discussion is presented to highlight the significant application of Neural Network in the areas of financial management; second the framework of proposed methodology has been outlined to examine the implication of audit fees on target sample. The underlying rational of this paper is to establish NNs as a diagnostic tool to assess the effect of audit fees on firms, which indeed warrants further empirical investigation. The importance of Neural Networks emerges from the fact that if external and internal audit fees can be disseminated by employing this methodology which is perceived more significantly robust than other econometric models, then accounting standards can be improved.