Diversity of Audit Committee Members and their Influence on Audit Fees
AUTHOR
Dr. Ahmed Eltweri
Assistant professor in Accounting- Liverpool John Moores University
ABSTRACT
The objective of issuing Corporate Governance Codes is to provide sound corporate governance to improve the oversight of management practices, accountability and transparency for the long-term business success.
Findings indicate that boards with larger sizes and higher independence pay higher audit fees to enhance oversight capacity and protect a wider range of stakeholders. The results also show that women on boards are more likely to reduce the risk of financial statement manipulation, with women leaning more toward honesty, caution, and conservatism. In addition, the reported results show that audit committees with a greater number of independent members are more inclined towards having higher quality audits to improve the quality of company reports. NEHME and JIZI 2018
Provides consistent evidence of a positive association between female representation on the audit committee and audit fees. Controlling for self-selection bias, this result does not change. Therefore, female directors are voluntarily appointed to corporate audit committees. Including the demographics of female managers participating in audit committees in audit fees, the models show that the increase in audit fees is driven by the level of professional experience of female managers rather than just their representation. The results of the supplementary analysis document that the positive relationship between female representation on the audit committee and audit fees is more pronounced when the audit engagement partner is female, indicating that the presence of women on both the supply and demand sides of audit pricing enhances audit quality more important than if women were Attendees only at the demand side stand of the audit fee. Salam and Sharif 2020.
The results show a significant positive relationship between the presence of a female financial expert on the audit committee and audit fees after controlling for a number of characteristics of the company and governance and the potential fit with the propensity matching degree analysis. From a demand-side perspective of audit pricing, the findings suggest that female financial experts on audit committees increase the need for assurances from external auditors. Using interaction terms, the authors found that women with financial experience on the audit committee had a stronger association with audit fees as the entity becomes more complex. Miglani and Ahmed, 2019
A positive relationship was found, which led to the conclusion that the presence of women on audit committees affects the quality of the external audit. Furthermore, we found that gender is an important feature of the audit committee in predicting audit quality and that women on the audit committee reinforce the positive relationship between the amount of financial resources and audit fees, and between risk and audit fees. On the contrary, we found that female representation dampens the positive relationship between complexity and audit fee (ALDAMEN, et al., 2018).A positive
relationship is found, leading to the conclusion that female presence on audit
committees influences the quality of the external audit. Further, we find that
gender is the significant audit committee charact eristic in predicting audit
quality and that women on the audit committee strengthen the positive
relationship between firm size and audit fees, and between risk and audit fees.
Conversely, we find that female representation dampens the positive relation-
ship between complexity and audit fees
A positive
relationship is found, leading to the conclusion that female presence on audit
committees influences the quality of the external audit. Further, we find that
gender is the significant audit committee charact eristic in predicting audit
quality and that women on the audit committee strengthen the positive
relationship between firm size and audit fees, and between risk and audit fees.
Conversely, we find that female representation dampens the positive relation-
ship between complexity and audit fees
The objective of issuing Corporate Governance Codes is to provide sound corporate governance to improve the oversight of management practices, accountability and transparency for the long-term business success.
Findings indicate that boards with larger sizes and higher independence pay higher audit fees to enhance oversight capacity and protect a wider range of stakeholders. The results also show that women on boards are more likely to reduce the risk of financial statement manipulation, with women leaning more toward honesty, caution, and conservatism. In addition, the reported results show that audit committees with a greater number of independent members are more inclined towards having higher quality audits to improve the quality of company reports. NEHME and JIZI 2018
Provides consistent evidence of a positive association between female representation on the audit committee and audit fees. Controlling for self-selection bias, this result does not change. Therefore, female directors are voluntarily appointed to corporate audit committees. Including the demographics of female managers participating in audit committees in audit fees, the models show that the increase in audit fees is driven by the level of professional experience of female managers rather than just their representation. The results of the supplementary analysis document that the positive relationship between female representation on the audit committee and audit fees is more pronounced when the audit engagement partner is female, indicating that the presence of women on both the supply and demand sides of audit pricing enhances audit quality more important than if women were Attendees only at the demand side stand of the audit fee. Salam and Sharif 2020.
The results show a significant positive relationship between the presence of a female financial expert on the audit committee and audit fees after controlling for a number of characteristics of the company and governance and the potential fit with the propensity matching degree analysis. From a demand-side perspective of audit pricing, the findings suggest that female financial experts on audit committees increase the need for assurances from external auditors. Using interaction terms, the authors found that women with financial experience on the audit committee had a stronger association with audit fees as the entity becomes more complex. Miglani and Ahmed, 2019
The main purpose of Corporate Governance (GC) Codes is to arrange for sound corporate governance to enhance the regulations of management performance, accountability and transparency for the continuing business achievement. Thus, the independence of the audit committees along with the size of the board has a great influence on the audit fees. In addition, to members, diversity especially women on boards would enhance the quality and reduce the risk of financial reporting manipulations, as women are more inclined with honesty, caution, conservatism (Nehme and Jizi 2018).
Furthermore, studies by (Aldamen, et al., 2018; Miglani and Ahmed, 2019 and Sellami et al., 2020) highlighted that audit fees would have been influenced when women sit on the board of the audit committees. Nevertheless, the audit fees would increase depending on the level of professional expertise the women would be held when the managerial role is been appointed to. These positive associations between the audit fees and the audit committees would be enhanced when the audit partner is women. In conclusion, diversity in the audit committee's members would affect the quality of the auditors’ tasks and would have a great impact on the audit fees.
KEYWORDS
Audit committee effectiveness, Audit fees, Board structure, Board gender diversity, External auditors
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