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Neural Network and Audit Fees: A Heuristic Onset

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  • Rama Prasad Kanungo

Abstract

This paper proposes a methodological approach to evaluate the determinants of audit fees by utilising Neural Networks. First, the application of NN is briefly discussed within areas of financial management; second, a methodological framework is developed to examine audit fees under NN specification. The underlying rational of this paper is to establish Neural Networks as a diagnostic tool to assess the effect of audit fees on firms capital structure. However, this methodology requires 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 quality can be improved.

Suggested Citation

  • Rama Prasad Kanungo, 2014. "Neural Network and Audit Fees: A Heuristic Onset," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 3(2), pages 55-60.
    • Handle: RePEc:rss:jnljef:v3i2p2
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    References listed on IDEAS

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    1. Altman, Edward I. & Marco, Giancarlo & Varetto, Franco, 1994. "Corporate distress diagnosis: Comparisons using linear discriminant analysis and neural networks (the Italian experience)," Journal of Banking & Finance, Elsevier, vol. 18(3), pages 505-529, May.
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