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Board characteristics and audit pricing post-Cadbury: a research note

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  • Noel O'Sullivan

Abstract

This paper examines the impact of board and audit committee characteristics on the audit fee paid by large UK companies in the post-Cadbury period. Our results suggest that audit fees remain predominantly influenced by the size, complexity and risk of the audit client. Additionally, we find that companies operating in regulated industries pay lower audit fees. Despite the increased emphasis on internal governance mechanisms, we find no evidence that board and audit committee characteristics influence auditors' pricing decisions. The absence of a relationship suggests that any fee reductions expected due to improved board monitoring may be counterbalanced by the increased audit effort and assurances desired by non-executive directors.

Suggested Citation

  • Noel O'Sullivan, 1999. "Board characteristics and audit pricing post-Cadbury: a research note," European Accounting Review, Taylor & Francis Journals, vol. 8(2), pages 253-263.
    • Handle: RePEc:taf:euract:v:8:y:1999:i:2:p:253-263
    DOI: 10.1080/096381899336023
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    References listed on IDEAS

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    1. Simunic, Da, 1980. "The Pricing Of Audit Services - Theory And Evidence," Journal of Accounting Research, Wiley Blackwell, vol. 18(1), pages 161-190.
    2. N O'Sullivan & S R Diacon, 1994. "Audit Fee Determination and Governance Structure: Empirical Evidence from UK Insurance Companies," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 19(1), pages 70-84, January.
    3. Palmrose, Zv, 1986. "The Effect Of Nonaudit Services On The Pricing Of Audit Services - Further Evidence," Journal of Accounting Research, Wiley Blackwell, vol. 24(2), pages 405-411.
    4. M. Ezzamel & D. Gwilliam & K. Holland, 1996. "Some Empirical Evidence from Publicly Quoted UK Companies on the Relationship Between the Pricing of Audit and Non-audit Services," Accounting and Business Research, Taylor & Francis Journals, vol. 27(1), pages 3-16.
    5. Michael Firth, 1997. "The Provision of Non-audit Services and the Pricing of Audit Fees," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 24(3), pages 511-525.
    6. Paul Collier & Alan Gregory, 1996. "Audit committee effectiveness and the audit fee," European Accounting Review, Taylor & Francis Journals, vol. 5(2), pages 177-198.
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    Cited by:

    1. Alhababsah, Salem & Yekini, Sina, 2021. "Audit committee and audit quality: An empirical analysis considering industry expertise, legal expertise and gender diversity," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 42(C).
    2. Rani Hoitash & Udi Hoitash, 2009. "The role of audit committees in managing relationships with external auditors after SOX: Evidence from the USA," Managerial Auditing Journal, Emerald Group Publishing, vol. 24(4), pages 368-397, April.

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