Interdependencies between Auditing and Corporate Governance – Evidence from Germany

Schmalenbach Business Review, Vol. 65, July 2013, pp.198-226

29 Pages Posted: 15 Oct 2013

See all articles by Dennis Voeller

Dennis Voeller

TBS Business School

Michael Bremert

University of Mannheim

Nicole Zein

University of Mannheim

Date Written: 2013

Abstract

We study the empirical relation between audit fees and governance mechanisms in Germany. Using data from German listed companies, we examine the German governance setting with its two-tier board system. Various model specifications control for potential endogeneity of the governance variables. We identify two major findings. First, we find that performance-based management remuneration has a significant positive impact on audit fees. This effect suggests that increased audit risk due to enhanced incentives for earnings management is reflected in higher audit fees. Second, we find a complementary relation between audit fees and the formation of an audit committee. The results regarding further board characteristics are ambiguous.

Keywords: Audit Fees, Corporate Governance, Management Compensation, Two-Tier

JEL Classification: M42

Suggested Citation

Voeller, Dennis and Bremert, Michael and Zein, Nicole, Interdependencies between Auditing and Corporate Governance – Evidence from Germany (2013). Schmalenbach Business Review, Vol. 65, July 2013, pp.198-226, Available at SSRN: https://ssrn.com/abstract=2339876

Dennis Voeller (Contact Author)

TBS Business School ( email )

1 Place Alphonse Jourdain
Toulouse, 31068
France

Michael Bremert

University of Mannheim ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

Nicole Zein

University of Mannheim ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

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