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The Impact of Conservatism Accounting on Audit Fees: Evidence From Portugal and Spain

The Impact of Conservatism Accounting on Audit Fees: Evidence From Portugal and Spain

Sandra Alves
Copyright: © 2021 |Pages: 28
ISBN13: 9781799866695|ISBN10: 1799866696|ISBN13 Softcover: 9781799866701|EISBN13: 9781799866718
DOI: 10.4018/978-1-7998-6669-5.ch013
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MLA

Alves, Sandra. "The Impact of Conservatism Accounting on Audit Fees: Evidence From Portugal and Spain." Transforming Corporate Governance and Developing Models for Board Effectiveness, edited by Qaiser Rafique Yasser and Abdullah Al-Mamun, IGI Global, 2021, pp. 253-280. https://doi.org/10.4018/978-1-7998-6669-5.ch013

APA

Alves, S. (2021). The Impact of Conservatism Accounting on Audit Fees: Evidence From Portugal and Spain. In Q. Yasser & A. Al-Mamun (Eds.), Transforming Corporate Governance and Developing Models for Board Effectiveness (pp. 253-280). IGI Global. https://doi.org/10.4018/978-1-7998-6669-5.ch013

Chicago

Alves, Sandra. "The Impact of Conservatism Accounting on Audit Fees: Evidence From Portugal and Spain." In Transforming Corporate Governance and Developing Models for Board Effectiveness, edited by Qaiser Rafique Yasser and Abdullah Al-Mamun, 253-280. Hershey, PA: IGI Global, 2021. https://doi.org/10.4018/978-1-7998-6669-5.ch013

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Abstract

For a sample of listed Portuguese and Spanish firms from 2010 to 2018, this study draws on audit pricing, substitution, signaling, and complementary theories to evaluate the impact of conservatism accounting on audit fees. Using fixed effects technique, the author finds a positive relationship between conservatism accounting and audit fees. The results suggest that firms with more conservative accounting (with strong internal corporate governance) could be more likely to demand high-quality audit to strengthen investor confidence in financial information and, thus pay higher audit fees. Therefore, this study supports signaling and complementary theories. The results also suggest that Big 4, growth, firm size, and leverage are positively related with audit fees. To Spain, audit risk and ROA are also positively related with audit fees.

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