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Auditor choice and audit fees in family firms: evidence from Tehran Stock Exchange

Author

Listed:
  • Javad Izadi
  • Mohammad Khorashadi
  • Maurice Pratt

Abstract

This paper examines auditor choice and audit fees in family firms on the Tehran Stock Exchange. The study analyses non-financial firms over ten years, using 1,050 firm-year observations. Probit and OLS regression methods are employed to test the hypotheses. Findings indicate that family firms, unlike non-family firms, are less likely to select large auditors and pay higher audit fees. Additionally, the choice of a large auditor mitigates the relationship between family ownership and audit fees. Family firms are also less likely to choose industry specialist auditors. This research enhances understanding of family ownership's impact on auditor selection and audit fees in Iran's emerging market. It contributes to accounting literature by providing empirical evidence on family control's effects on audit practices in a developing economy and offers a foundation for further research in similar contexts. The findings are based on Iran's unique financial conditions, differing from those in developed countries.

Suggested Citation

  • Javad Izadi & Mohammad Khorashadi & Maurice Pratt, 2024. "Auditor choice and audit fees in family firms: evidence from Tehran Stock Exchange," International Journal of Critical Accounting, Inderscience Enterprises Ltd, vol. 14(1), pages 82-100.
    • Handle: RePEc:ids:ijcrac:v:14:y:2024:i:1:p:82-100
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