Document Type

Journal Article

Department/Unit

Department of Accountancy and Law

Title

The effects of managerial shareholding on audit fees: Evidence from Hong Kong

Language

English

Abstract

This study investigates how managerial shareholding affects audit pricing for listed companies in Hong Kong. Based on agency theory, we examine the relationship between managerial shareholding and audit fees, from the perspectives of the alignment effect and the entrenchment effect. We posit a non-linear relationship, which is tested by grouping sample firms into three levels of managerial shareholding: low, intermediate, and high regions of management ownership. The empirical results reveal that the association of managerial ownership with audit fees is non-linear: managerial shareholding is significantly and negatively associated with audit fees in the low and high regions of managerial ownership, whereas the association is significantly positive in the intermediate region. These correlations are further confirmed by the results of curvilinear regression analysis. © 2012 John Wiley & Sons Ltd.

Keywords

Audit pricing decision, Corporate governance, Divergence-of-interests effect, Entrenchment effect, Managerial shareholding (ownership)

Publication Date

2013

Source Publication Title

International Journal of Auditing

Volume

17

Issue

3

Start Page

227

End Page

245

Publisher

Wiley

DOI

10.1111/ijau.12000

Link to Publisher's Edition

http://dx.doi.org/10.1111/ijau.12000

ISSN (print)

10906738

ISSN (electronic)

10991123

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