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OWNERSHIP STRUCTURES AND CHARACTERISTICS INFLUENCE ON AUDIT FEE

Year 2018, , 160 - 167, 13.07.2018
https://doi.org/10.17261/Pressacademia.2018.822

Abstract

Purpose - The purpose of this paper was to investigate the influence of the structures and characteristics of corporate ownership on audit

fees paid to external auditors by Indonesian companies listed on Indonesian Stock Exchange (ISE).

Methodology - The population of this research was non-financial companies listed in Indonesia Stock Exchange during the period of 2014-

2016 that were sampled using purposive sampling method resulted in 150 companies met the criteria. Data collected were then analyzed

using multiple linear regression analysis. The dependent variable was the level of audit fees charged to the client by an external audit

represented as AFEE, measured in the Indonesia rupiah. Meanwhile, the independent variables were ownership structure of the company

consisted of: (1) managerial ownership, (2) foreign ownership, (3) government ownership; and characteristics structure, which is divided

into: (4) complexity, (5) current ratio, (6) leverage, (7) profitability.

Findings- The results showed that firms with larger foreign ownership, on government ownership, and on profitability significantly and

positively affected audit fees, but higher managerial ownership significantly and negatively affected firms with audit fees. The results also

showed the insignificant relationship between complexity, current ratio and leverage and audit fees.

Conclusion- Managerial Ownership, Foreign ownership, government ownership, and profitability influence on audit fee for external

auditor.

References

  • Adelopo, I., Jallow, K., & Scott, P. (2012). Multiple large ownership structure, audit committee activity and audit fees: Evidence from the UK. Journal of Applied Accounting Research, 13(2), 100–121.
  • Baldacchino, Peter.J, et.al. (2014). Factors Infulencing External Audit Fees in Malta. Bank of Valletta Review, 48, 26-40
  • Cameran, M. (2005). Audit Fees and the Large Auditor Premium in the Italian Market. International Journal of Auditing Int. J. Audit. Int. J. Audit, 9(9), 129–146.
  • Chan, P., Ezzamel, M., & Gwilliam, D. (1993). Determinates of audit fees for quoted UK companies. Journal of Business Finance & Accounting, 20(6), 765–786.
  • Ebrahim, A. (2010). Audit fee premium and auditor change: the effect of Sarbanes-Oxley Act. Managerial Auditing Journal, 25(2), 102–121.
  • Fafatas, S. A., & Jialin Sun, K. (2010). The relationship between auditor size and audit fees: further evidence from big four market shares in emerging economies. Research in Accounting in Emerging Economies (Vol. 10).
  • El-Gammal, Walid.(2012). Determinants of Audit Fees:Evidence from Lebanon. International Business Research. 5(11), 136-145.
  • Ghosh, S. (2011). Firm ownership type, earnings management and auditor relationships: evidence from India. Managerial Auditing Journal, 26(4), 350–369.
  • Ghozali, Imam, 2012. Aplikasi Analisis Multivariate Dengan Program IBM SPSS 20.Edisi 6. Badan Penerbit Universitas Diponegoro, Semarang.
  • Gonthier‐Besacier, N., & Schatt, A. (2007). Determinants of audit fees for French quoted firms. Managerial Auditing Journal, 22(2), 139– 160.
  • Griffin, P. A., Lont, D. H., & Sun, Y. (2009). Governance regulatory changes, International Financial Reporting Standards adoption, and New Zealand audit and non-audit fees: Empirical evidence. Accounting and Finance, 49(4), 697–724.
  • Hay, D., Knechel, W. R., & Wong, N. (2006). Audit Fees: A Meta-analysis of the Effect of Supply and Demand Attributes. Contemporary Accounting Research, 23(1), 141–91.
  • Hogan, C. E., & Wilkins, M. S. (2008). Evidence on the audit risk model: Do auditors increase audit fees in the presence of internal control deficiencies? Contemporary Accounting Research, 25
  • Hoitash, R., Markelevich, A., & Barragato, C. a. (2007). Auditor fees and audit quality. Managerial Auditing Journal, 22(8), 761–786.
  • Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial. Journal of Financial Economics, 3, 305–360.
  • Joshi, P. L., & Al-bastaki, H. (2000). Determinants of Audit Fees : Evidence from the Companies Listed in Bahrain, 138(January), 129–138.
  • Mazlina Mustapha, & Ayoib Che Ahmad. (2011). Agency Theory and Managerial Ownership: Evidence from Malaysia. Managerial Auditing Journal, 26(5), 419–436.
  • Mitra, S., Hossain, M., & Deis, D. R. (2007). The empirical relationship between ownership characteristics and audit fees. Review of Quantitative Finance and Accounting, 28(3), 257–285.
  • Nelson, S., & Rusdi, N. (2015). Journal of Accounting in Emerging Economies Article information
  • Niemi, L. (2005). Audit effort and fees under concentrated client ownership: Evidence from four international audit firms. International Journal of Accounting, 40(4), 303–323.
  • O’Keefe, T. B., Simunic, D. A., & Stein, M. T. (1994). The Production of Audit Services: Evidence from a Major Public Accounting Firm. Journal of Accounting Research, 32(2), 241–261 CR–Copyright169; 1994 Accounting
  • Oktorina, M., & Wedari, L. K. (2015). An Empirical Investigation on Ownership Characteristics, Activities of the Audit Committee, and Audit Fees in Companies Listed on Indonesia Stock Exchange. Applied Finance and Accounting, 1(1), 20–29.
  • Simunic, D. (1980). The Pricing of Audit Services: Theory and Evidence. Journal of Accounting Research, 18, 161–190.
  • Wahab, E. A. A., Zain, M. M., & James, K. (2011). Audit fees in Malaysia: Does corporate governance matter? Asian Academy of Management Journal of Accounting and Finance, 7(1), 1–27.
  • Yatim, P., Kent, P., & Clarkson, P. (2006). Governance structures, ethnicity, and audit fees of Malaysian listed firms. Managerial Auditing Journal, 21(7), 757–782.
Year 2018, , 160 - 167, 13.07.2018
https://doi.org/10.17261/Pressacademia.2018.822

Abstract

References

  • Adelopo, I., Jallow, K., & Scott, P. (2012). Multiple large ownership structure, audit committee activity and audit fees: Evidence from the UK. Journal of Applied Accounting Research, 13(2), 100–121.
  • Baldacchino, Peter.J, et.al. (2014). Factors Infulencing External Audit Fees in Malta. Bank of Valletta Review, 48, 26-40
  • Cameran, M. (2005). Audit Fees and the Large Auditor Premium in the Italian Market. International Journal of Auditing Int. J. Audit. Int. J. Audit, 9(9), 129–146.
  • Chan, P., Ezzamel, M., & Gwilliam, D. (1993). Determinates of audit fees for quoted UK companies. Journal of Business Finance & Accounting, 20(6), 765–786.
  • Ebrahim, A. (2010). Audit fee premium and auditor change: the effect of Sarbanes-Oxley Act. Managerial Auditing Journal, 25(2), 102–121.
  • Fafatas, S. A., & Jialin Sun, K. (2010). The relationship between auditor size and audit fees: further evidence from big four market shares in emerging economies. Research in Accounting in Emerging Economies (Vol. 10).
  • El-Gammal, Walid.(2012). Determinants of Audit Fees:Evidence from Lebanon. International Business Research. 5(11), 136-145.
  • Ghosh, S. (2011). Firm ownership type, earnings management and auditor relationships: evidence from India. Managerial Auditing Journal, 26(4), 350–369.
  • Ghozali, Imam, 2012. Aplikasi Analisis Multivariate Dengan Program IBM SPSS 20.Edisi 6. Badan Penerbit Universitas Diponegoro, Semarang.
  • Gonthier‐Besacier, N., & Schatt, A. (2007). Determinants of audit fees for French quoted firms. Managerial Auditing Journal, 22(2), 139– 160.
  • Griffin, P. A., Lont, D. H., & Sun, Y. (2009). Governance regulatory changes, International Financial Reporting Standards adoption, and New Zealand audit and non-audit fees: Empirical evidence. Accounting and Finance, 49(4), 697–724.
  • Hay, D., Knechel, W. R., & Wong, N. (2006). Audit Fees: A Meta-analysis of the Effect of Supply and Demand Attributes. Contemporary Accounting Research, 23(1), 141–91.
  • Hogan, C. E., & Wilkins, M. S. (2008). Evidence on the audit risk model: Do auditors increase audit fees in the presence of internal control deficiencies? Contemporary Accounting Research, 25
  • Hoitash, R., Markelevich, A., & Barragato, C. a. (2007). Auditor fees and audit quality. Managerial Auditing Journal, 22(8), 761–786.
  • Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial. Journal of Financial Economics, 3, 305–360.
  • Joshi, P. L., & Al-bastaki, H. (2000). Determinants of Audit Fees : Evidence from the Companies Listed in Bahrain, 138(January), 129–138.
  • Mazlina Mustapha, & Ayoib Che Ahmad. (2011). Agency Theory and Managerial Ownership: Evidence from Malaysia. Managerial Auditing Journal, 26(5), 419–436.
  • Mitra, S., Hossain, M., & Deis, D. R. (2007). The empirical relationship between ownership characteristics and audit fees. Review of Quantitative Finance and Accounting, 28(3), 257–285.
  • Nelson, S., & Rusdi, N. (2015). Journal of Accounting in Emerging Economies Article information
  • Niemi, L. (2005). Audit effort and fees under concentrated client ownership: Evidence from four international audit firms. International Journal of Accounting, 40(4), 303–323.
  • O’Keefe, T. B., Simunic, D. A., & Stein, M. T. (1994). The Production of Audit Services: Evidence from a Major Public Accounting Firm. Journal of Accounting Research, 32(2), 241–261 CR–Copyright169; 1994 Accounting
  • Oktorina, M., & Wedari, L. K. (2015). An Empirical Investigation on Ownership Characteristics, Activities of the Audit Committee, and Audit Fees in Companies Listed on Indonesia Stock Exchange. Applied Finance and Accounting, 1(1), 20–29.
  • Simunic, D. (1980). The Pricing of Audit Services: Theory and Evidence. Journal of Accounting Research, 18, 161–190.
  • Wahab, E. A. A., Zain, M. M., & James, K. (2011). Audit fees in Malaysia: Does corporate governance matter? Asian Academy of Management Journal of Accounting and Finance, 7(1), 1–27.
  • Yatim, P., Kent, P., & Clarkson, P. (2006). Governance structures, ethnicity, and audit fees of Malaysian listed firms. Managerial Auditing Journal, 21(7), 757–782.
There are 25 citations in total.

Details

Primary Language English
Journal Section Articles
Authors

Juan Octavianus Harahap This is me 0000-0002-5144-8361

Andrian Budi Prasetyo This is me 0000-0002-4332-6241

Publication Date July 13, 2018
Published in Issue Year 2018

Cite

APA Harahap, J. O., & Prasetyo, A. B. (2018). OWNERSHIP STRUCTURES AND CHARACTERISTICS INFLUENCE ON AUDIT FEE. Journal of Economics Finance and Accounting, 5(2), 160-167. https://doi.org/10.17261/Pressacademia.2018.822

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