The Efficiency of Corporate Boards and Firms' Audit Pay

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Abstract

The objective of this research is to study different possible causes that affect variations in the audit fees. The UK corporate governance code (2012, 2014) states that the communication between the Board of Directors and the shareholders should be progressive, effective, and highly compliant with the code. We found that there is a significant relationship between the characteristics of the Board of Directors and audit fees. The collegiality principle relative to the Board of Directors' characteristics influences some of the characteristics of the Audit Committee. Board of Directors', in their role, controls the role of audit committee directors.
From the agency theory standpoint, audit processes are external governance tools used by shareholders. In order to evaluate the relationship between audit fees and corporate governance theoretically and statistically over a period of five years, the empirical model is built (for FTSE 350 financial institutions between 2008 and 2012). In this study, we focus on a number of important tools associated to alterations in audit fees, and we suggest various recommendations. This study may also be helpful to corporate experts and decision makers to enhance their relationship with external auditors.

Authors

• Mohammad Jizi, Lebanese American University

• Rabih Nehme, Lebanese American University