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Effect of Co-Opted Board on Audit Fees
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Publication Year
2020-02
Journal
국제회계연구
Publisher
한국국제회계학회
Citation
국제회계연구 No.89, pp.65-86
Keyword
Audit FeesAudit QualityCo-Opted Board감사보수감사품질코옵티드 이사
Abstract
In this study, we examine the effect of co-opted board on audit fees (as a proxy for audit quality), wherein the board comprises directors who are appointed after the CEO assumes office. We use two measures developed by Coles et al.(2014) to calculate the co-opted board. First, we use CO-OPTION, which is the proportion of the board size comprising the co-opted board. Second, we use TW CO-OPTION, which is the sum of co-opted directors’ tenure divided by the sum of all directors’ tenure. <br>Using a sample of 9,592 firm-year observations in the United States for the period 2000 to 2013, we find that having a high proportion of co-opted board members leads to a decrease in audit quality. This is reflected in the negative relationship between co-opted board and audit fees. This evidence is consistent with the notion that board composition and the effectiveness of board monitoring play significant roles in determining audit fees. <br>Overall, our results are consistent with those of prior studies that co-opted board imposes weak monitoring. In addition, our study contributes to the auditing literature by showing how board composition and monitoring effectiveness influence audit fees.
ISSN
1598-3919
Language
Eng
URI
https://aurora.ajou.ac.kr/handle/2018.oak/35162
DOI
https://doi.org/10.21073/kiar.2020..89.004
Type
Article
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Lee, Junyoup  Image
Lee, Junyoup 이준엽
Department of Business Administration
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