Auditor Choice and Audit Fees in Family Firms: Evidence from the S&P 1500

Posted: 24 Jun 2014

See all articles by Joanna L.Y. Ho

Joanna L.Y. Ho

University of California, Irvine - Accounting Area

Fei Kang

California State Polytechnic University, Pomona

Date Written: November 1, 2013

Abstract

We examine auditor choice and audit fees in family firms using data from Standard & Poor's (S&P) 1500 firms. We find that, compared to non-family firms, family firms are less likely to hire top-tier auditors due to the less severe agency problems between owners and managers. Our results also show that family firms, on average, incur lower audit fees than non-family firms, which is driven by family firms' lower demand for external auditing services and auditors' perceived lower audit risk for family firms. Our additional analysis indicates that the tendency of family firms to hire non-top-tier auditors and to pay lower audit fees is stronger when family owners actively monitor their firms.

Keywords: auditor choice, audit fees, family firms, agency problems

Suggested Citation

Ho, Joanna L.Y. and Kang, Fei, Auditor Choice and Audit Fees in Family Firms: Evidence from the S&P 1500 (November 1, 2013). Auditing: A Journal of Practice & Theory, Vol. 32, No. 4, 2013. Available at SSRN: https://ssrn.com/abstract=2458259

Joanna L.Y. Ho (Contact Author)

University of California, Irvine - Accounting Area ( email )

Irvine, CA 92697-3125
United States
949-824-4041 (Phone)
949-725-2833 (Fax)

Fei Kang

California State Polytechnic University, Pomona ( email )

3801 W. Temple Avenue
Pomona, CA 91768
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
1,045
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information