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The association between audit committee and board of director effectiveness and changes in the nonaudit fee ratio

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  • Ho-Young Lee

Abstract

Investors and the US SEC are interested in the impact of nonaudit fees on the economic bonding between auditors and their clients and in the role of audit committees in monitoring this economic bonding. The results of this study show a negative association between audit committee effectiveness and changes in the nonaudit to audit fee ratio, suggesting that effective audit committees generally minimize the nonaudit fee ratio in order to enhance auditor independence. In addition, the results of this study suggest that effective Board of Directors also limit increases in the nonaudit fee ratio, possibly due to their own concerns over auditor independence.

Suggested Citation

  • Ho-Young Lee, 2008. "The association between audit committee and board of director effectiveness and changes in the nonaudit fee ratio," Applied Financial Economics, Taylor & Francis Journals, vol. 18(8), pages 629-638.
    • Handle: RePEc:taf:apfiec:v:18:y:2008:i:8:p:629-638
    DOI: 10.1080/09603100601166887
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    Cited by:

    1. Mary Jane Lenard & Karin A. Petruska & Pervaiz Alam & Bing Yu, 2012. "Indicators of audit fees and fraud classification: impact of SOX," Managerial Auditing Journal, Emerald Group Publishing, vol. 27(5), pages 500-525, May.
    2. Seraj Hamed Bahrawe & Harashid Haron & Ali Nawari Bin Hasan, 2016. "Corporate Governance and Auditor Independence in Saudi Arabia: Literature Review and Proposed Conceptual Framework," International Business Research, Canadian Center of Science and Education, vol. 9(11), pages 1-15, November.
    3. Wael Almaqoushi & Ronan Powell, 2021. "Audit committee quality indices, reporting quality and firm value," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(1-2), pages 185-229, January.

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