The Relationship between Auditing Fees and Board Compensation

Abstract

The aim of this study is to investigate the relation between audit fees and Board compensation. The sample includes 72 firms listed in Tehran Stock Exchange during the period from 2005 to 2009, which their shares are actively traded in the Exchange. The results indicate a positive relation between the audit fee and compensation of the Board. With the increase in compensation of directors, their incentives to manage earnings will be greater and sine it requires a higher quality audit, payment of fee will be higher.

Keywords

• Audit fee
• Board compensation
• Earning Management
• Accruals