Abstract
PurposeThe purpose of this paper is to investigate the relationship between cash holdings, investment opportunities and financial constraint with audit fees in Iran.Design/methodology/approachIn order to collect data, all manufacturing companies listed on the Tehran Stock Exchange are used to test the hypotheses during 2008–2015. Panel data and combined data regression model were used for data analysis. Tests were performed using R statistical software.FindingsThe results obtained from the statistical analysis of research hypotheses indicated that there is a significant relationship between cash holdings and audit fees. Furthermore, the relationship between cash holdings, financial constraints and audit fees was significant. In addition, there was no significant relationship between cash holdings, investment opportunities and audit fees.Originality/valueThe current study employed a unique topic in terms of a developing country, and the results may give strength to other developing nations.
Highlights
Pricing of audit services is one of the interesting topics for many audit scholars
Since the p-value of the table is less than 5 percent acceptable error, there is a significant relationship
There is no significant relationship between cash holdings and investment opportunity and audit fees
Summary
Research method used in these studies is slightly different, most of them pursue a general objective, that is, the realization of contributing factors on audit fees. Being aware of these factors is advantageous for both the employer and the auditor. By being aware of such factors, auditors are able to price their services more appropriately (Gist, 1992). The significance of this issue is growing increasingly, especially in recent years and after the establishment of Iranian Official Auditors Community. An auditor is called competent when he/she is able to make the best estimation of his/her fees concerning the characteristics of the unit under analysis
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