Related Party Transactions and Audit Fees: Indian Evidence
41 Pages Posted: 17 Jun 2022
Date Written: June 17, 2022
We examine the effect of related party transactions (RPTs) on audit fees in Indian public companies. RPTs can be used to manipulate financial statements as well as transfer wealth between firms and their related parties, and the presence of RPTs increases audit risk. We find that related party sales are associated with 17.4 percent increase in audit fees, indicating that such transactions increase the audit risk and require significant additional audit effort.
Keywords: auditing, audit risk; audit fees; related party transactions; corporate governance
JEL Classification: G34; M41; M42
Suggested Citation: Suggested Citation