Auditor choice and Audit Fees in Family Firms: Evidence from Tehran Stock Exchange

Lists

Izadi, Javad ORCID: https://orcid.org/0000-0001-5607-5077, Khorashadi, Mohammad and Pratt, Maurice (2023) Auditor choice and Audit Fees in Family Firms: Evidence from Tehran Stock Exchange. International Journal of Critical Accounting, 14. ISSN 1757-9848 (In Press)

Preview

PDF (PDF/A)
A.manuscript.pdf - Accepted Version
Available under License Creative Commons Attribution.
Download (489kB) | Preview

Abstract

Purpose - The main aim of this paper is to examine auditor choice and audit fees in family firms on the Tehran Stock Exchange.
Design/methodology/approach – The hypotheses set are tested by analysing all firms except financial firms listed on the Tehran Stock Exchange for the period of 10 years, using a sample of 1,050 firm-year observations. Probit and ordinary least squares regression (OLS) is used to investigate the associations proposed in the research hypotheses.
Finding - Our findings show that in family firms, in contrast with non-family firms, the large auditor is less often selected as the firm’s auditor. The findings also show that family firms pay higher fees for their audits in comparison with non-family firms and show that the choice of large auditor reduces the relationship between family ownership and audit fee. The additional analysis shows that choosing industry specialist auditors is less likely in family firms compared to non-family firms.
Practical implications – The importance of this research is in the increased awareness for researchers and users about family ownership and the selection of auditors and audit fees in the emerging market capitalization of Iran. This research contributes to the accounting literature by providing empirical evidence of the effects of family control and ownership on audit pricing and auditor choice in a developing economy context. Also, this research can provide a new route for research on this issue in developing countries, e.g., Iran.
Originality/value - These findings were discovered by means of the financial data in the particular environmental conditions of Iran which differ from features and conditions for institutional investors in developed countries.

Item Type:	Article
Keywords:	Family firms, Auditor choice, Audit fee, Agency problem
Subjects:	Business and finance
Depositing User:	Eilish McLaughlin
Date Deposited:	16 Oct 2023 10:12
Last Modified:	06 Feb 2024 16:17
URI:	https://repository.uwl.ac.uk/id/eprint/10429