Investigating the Relationship between Institutional Ownership and Audit Fees with Emphasizing Political Connections

Objective: Auditing as an independent profession has the task of accrediting financial statements and can help build trust for stakeholders. The fees include any charges that are paid to the auditor and the audit firm in accordance with the agreement, on the basis of the contract to the auditor and...

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Autores principales:	Reza Jamei, Zohreh Koolivand
Formato:	article
Lenguaje:	FA
Publicado:	Shahid Bahonar University of Kerman 2021
Materias:	audit fees institutional ownership political connections of firms Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/b38bf85c66a64deab31e5bc1ad945000
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spelling	oai:doaj.org-article:b38bf85c66a64deab31e5bc1ad9450002021-11-04T19:57:06ZInvestigating the Relationship between Institutional Ownership and Audit Fees with Emphasizing Political Connections2008-89142476-292X10.22103/jak.2021.14837.3107https://doaj.org/article/b38bf85c66a64deab31e5bc1ad9450002021-05-01T00:00:00Zhttps://jak.uk.ac.ir/article_2791_17c0bf729de5b6ec185320ac36aaba5a.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XObjective: Auditing as an independent profession has the task of accrediting financial statements and can help build trust for stakeholders. The fees include any charges that are paid to the auditor and the audit firm in accordance with the agreement, on the basis of the contract to the auditor and the audit firm. The impact of audit factors on audit fees is very important because the lack of attention to these factors and audit pricing as a homogeneous and non- competitive commodity can negatively affect the independence and quality of audit work. On the other hand, the ownership structure of the firms by affecting the intensity of the agency problem, size, risk, and complexity of the company will affect the governance of the audit. Institutional owners are more aware of the individual investors on the company and this monitoring reduces the audit fee, reducing the agency’s problems and improving the quality of the financial reporting and improving the volume of audit operations. Also, the quality of financial reporting is affected by the company's political connections. The purpose of this study was to investigate the relationship between institutional ownership and audit fees and the impact of political Connections on the relationship between institutional ownership and audit fees. Method: The study has been conducted to analysis 114 firms selected using the systematic sampling from among firms accepted in the Tehran stock exchange during 2011-2017. In general, 798 firm-year observations were considered to be analyzed. For surveying the relationship between variables, multivariable regression is used by GLS approach. Also, in order to testing hypotheses we have used Panel Data approach. Results: The findings indicate that there is a negative and significant relationship between institutional ownership and audit fees, but the political relationships in firms do not influence the relationship between institutional ownership and audit fees significations. Conclusion: According to the findings, the auditors are paid less attention to the auditors with increasing institutional ownership, higher company monitoring and lower audit work volume. The negativity of this relationship is based on an effective monitoring hypothesis. Due to the efficient monitoring hypothesis, due to the volume of invested wealth, the institutions manage their investments more actively. One of the reasons that can be expressed does not affect the relationship between institutional ownership and audit fees. The presence of the board and directors with political connections may have sufficient monitoring of financial statements due to the maintenance of their reputations and their good reputation, and to reassure shareholders that the existence of the company's political connections does not undermine the quality of financial reporting. In fact, by specifying the operational expectations and coordination of ownership policies, there is a control over the activities of companies with government shareholders, in fact, because of the careful monitoring of the legislator, the controllers do not need additional auditor assurance.Reza JameiZohreh KoolivandShahid Bahonar University of Kermanarticleaudit feesinstitutional ownershippolitical connections of firmsAccounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 12, Iss 1, Pp 159-172 (2021)
institution	DOAJ
collection	DOAJ
language	FA
topic	audit fees institutional ownership political connections of firms Accounting. Bookkeeping HF5601-5689
spellingShingle	audit fees institutional ownership political connections of firms Accounting. Bookkeeping HF5601-5689 Reza Jamei Zohreh Koolivand Investigating the Relationship between Institutional Ownership and Audit Fees with Emphasizing Political Connections
description	Objective: Auditing as an independent profession has the task of accrediting financial statements and can help build trust for stakeholders. The fees include any charges that are paid to the auditor and the audit firm in accordance with the agreement, on the basis of the contract to the auditor and the audit firm. The impact of audit factors on audit fees is very important because the lack of attention to these factors and audit pricing as a homogeneous and non- competitive commodity can negatively affect the independence and quality of audit work. On the other hand, the ownership structure of the firms by affecting the intensity of the agency problem, size, risk, and complexity of the company will affect the governance of the audit. Institutional owners are more aware of the individual investors on the company and this monitoring reduces the audit fee, reducing the agency’s problems and improving the quality of the financial reporting and improving the volume of audit operations. Also, the quality of financial reporting is affected by the company's political connections. The purpose of this study was to investigate the relationship between institutional ownership and audit fees and the impact of political Connections on the relationship between institutional ownership and audit fees. Method: The study has been conducted to analysis 114 firms selected using the systematic sampling from among firms accepted in the Tehran stock exchange during 2011-2017. In general, 798 firm-year observations were considered to be analyzed. For surveying the relationship between variables, multivariable regression is used by GLS approach. Also, in order to testing hypotheses we have used Panel Data approach. Results: The findings indicate that there is a negative and significant relationship between institutional ownership and audit fees, but the political relationships in firms do not influence the relationship between institutional ownership and audit fees significations. Conclusion: According to the findings, the auditors are paid less attention to the auditors with increasing institutional ownership, higher company monitoring and lower audit work volume. The negativity of this relationship is based on an effective monitoring hypothesis. Due to the efficient monitoring hypothesis, due to the volume of invested wealth, the institutions manage their investments more actively. One of the reasons that can be expressed does not affect the relationship between institutional ownership and audit fees. The presence of the board and directors with political connections may have sufficient monitoring of financial statements due to the maintenance of their reputations and their good reputation, and to reassure shareholders that the existence of the company's political connections does not undermine the quality of financial reporting. In fact, by specifying the operational expectations and coordination of ownership policies, there is a control over the activities of companies with government shareholders, in fact, because of the careful monitoring of the legislator, the controllers do not need additional auditor assurance.
format	article
author	Reza Jamei Zohreh Koolivand
author_facet	Reza Jamei Zohreh Koolivand
author_sort	Reza Jamei
title	Investigating the Relationship between Institutional Ownership and Audit Fees with Emphasizing Political Connections
title_short	Investigating the Relationship between Institutional Ownership and Audit Fees with Emphasizing Political Connections
title_full	Investigating the Relationship between Institutional Ownership and Audit Fees with Emphasizing Political Connections
title_fullStr	Investigating the Relationship between Institutional Ownership and Audit Fees with Emphasizing Political Connections
title_full_unstemmed	Investigating the Relationship between Institutional Ownership and Audit Fees with Emphasizing Political Connections
title_sort	investigating the relationship between institutional ownership and audit fees with emphasizing political connections
publisher	Shahid Bahonar University of Kerman
publishDate	2021
url	https://doaj.org/article/b38bf85c66a64deab31e5bc1ad945000
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Investigating the Relationship between Institutional Ownership and Audit Fees with Emphasizing Political Connections

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