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Audit fees, Non-audit fees and Coporate Performance

Author

Listed:
  • Cinderela Andrade dos Santos

    (FEP-UP, School of Economics and Management, University of Porto)

  • António Cerqueira

    (FEP-UP, School of Economics and Management, University of Porto)

  • Elísio Brandão

    (FEP-UP, School of Economics and Management, University of Porto)

Abstract

Our research examines whether audit and non-audit fees are associated with firm performance, so, we study this relationship taking into account the impact of operating and corporate governance characteristics on firm performance. The sample in study is non-financial firms in S&P 500 covering the period from 2002 to 2014. We find a significant negative relationship between corporate performance and non-audit fees. This suggests that the increase (decrease) in corporate performance is related to the decrease (increase) in non-audit fees. The results add to the growing body of literature documenting relations between firm performance and remuneration of audit services, as well as to our understanding of the determinants of corporate performance. Furthermore, this study highlights the possible matter of providing non-audit services jointly with audit services, confine the functions of an auditor and consequently compromise the independence, that ultimately decrease the firm performance.

Suggested Citation

  • Cinderela Andrade dos Santos & António Cerqueira & Elísio Brandão, 2016. "Audit fees, Non-audit fees and Coporate Performance," FEP Working Papers 570, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:570
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    References listed on IDEAS

    as
    1. Scott Whisenant & Srinivasan Sankaraguruswamy & K. Raghunandan, 2003. "Evidence on the Joint Determination of Audit and Non‐Audit Fees," Journal of Accounting Research, Wiley Blackwell, vol. 41(4), pages 721-744, September.
    2. Mahbub Zaman & Mohammed Hudaib & Roszaini Haniffa, 2011. "Corporate Governance Quality, Audit Fees and Non-Audit Services Fees," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 38(1-2), pages 165-197, January.
    3. Ronald C. Anderson & David M. Reeb, 2003. "Founding-Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1327, June.
    4. Bhagat, Sanjai & Bolton, Brian, 2008. "Corporate governance and firm performance," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 257-273, June.
    5. Sami, Heibatollah & Wang, Justin & Zhou, Haiyan, 2011. "Corporate governance and operating performance of Chinese listed firms," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 20(2), pages 106-114.
    6. Yang, Tina & Zhao, Shan, 2014. "CEO duality and firm performance: Evidence from an exogenous shock to the competitive environment," Journal of Banking & Finance, Elsevier, vol. 49(C), pages 534-552.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Audit Fees; Non-Audit Fees; Corporate Performance; Corporate Governance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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