Audit Fees and Firm Performance

30 Pages Posted: 23 Nov 2012

See all articles by Vânia Moutinho

Vânia Moutinho

University of Porto - Faculty of Economics

António Cerqueira

Universidade do Porto - Faculdade de Economia (FEP)

Elisio Brandao

Universidade do Porto - Faculdade de Economia (FEP)

Date Written: November 23, 2012

Abstract

There are multiple studies investigating firm performance, in particular studies identifying firm characteristics that drive performance. On the other hand, research on the pricing of audit fees provides credible evidence that the financial condition of a client is a critical factor, in the sense that riskier clients demand more thorough audit procedures. This study investigates the relationship between audit fees and firm performance. Using a sample of U.S. publicly traded, non-financial firms covering the period from 2000 to 2008, a fixed effects model is presented to estimate firm operating performance. The model included standard control variables, such as size, leverage, sales growth and research and development intensity. In addition, measures of corporate governance were introduced. This study provides empirical evidence on the relationship between firm performance and audit fees. Specifically, increases (decreases) in operating performance are connected with decreases (increases) in audit fees. This investigation provides initial grounds on the performance perspective of the stated association.

Keywords: Firm Performance, Audit Fees, Corporate Governance

JEL Classification: G30, M42

Suggested Citation

Moutinho, Vânia and Cerqueira, António and Brandão, Elísio Fernando Moreira, Audit Fees and Firm Performance (November 23, 2012). Available at SSRN: https://ssrn.com/abstract=2180020 or http://dx.doi.org/10.2139/ssrn.2180020

Vânia Moutinho

University of Porto - Faculty of Economics ( email )

Rua Dr. Roberto Frias
4200-464 Porto
Portugal

António Cerqueira (Contact Author)

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Roberto Frias
s/n
Porto, 4200-464
Portugal

Elísio Fernando Moreira Brandão

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Roberto Frias
s/n
Porto, 4200-464
Portugal

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
794
Abstract Views
3,226
rank
37,214
PlumX Metrics