Linear Prices Equilibria and Nonexclusive Insurance Market
AbstractFamily businesses are an important part of the world economy (Anderson and Reeb, 2003) and show significant differences in their corporate governance compared to non-family firms. Although displaying evident unique features, family firms have received relatively little attention as distinct from their equivalents in publicly held firms. Our study contributes to this growing research and investigates empirically the relationship between family shareholding and audit pricing. Using a sample of 3291 firm-year observations of major U.S. listed companies, for the period 2006- 2008, our results demonstrate that audit fees is negatively associated to family shareholding after taking into account unobservable firm effects, time-varying, industry effects and traditional control variables. The empirical results are robust to alternative family shareholding measures and estimation model specifications. Our results are consistent with the convergence-of-interests hypothesis suggesting that family firms face lower manager/shareholders agency costs. Auditors charge lower fees for family firms because of lower information asymmetry and risk as the controlling family is well informed about the firm and is better able to monitor managerial decisions.
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Bibliographic InfoPaper provided by Department of Research, Ipag Business School in its series Working Papers with number 2014-042.
Length: 12 pages
Date of creation: 01 Jan 2014
Date of revision:
Family firms; Audit Fees; Agency Conflicts; Corporate Governance;
Other versions of this item:
- Frédéric Loss & Gwanaël Piaser, 2013. "Linear Prices Equilibria and Nonexclusive Insurance Market," Working Papers hal-00870113, HAL.
- NEP-ALL-2014-02-21 (All new papers)
- NEP-BEC-2014-02-21 (Business Economics)
- NEP-CFN-2014-02-21 (Corporate Finance)
- NEP-IAS-2014-02-21 (Insurance Economics)
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