The effect of deviation from industry norms on audit fees with the moderating role of auditor characteristics
Subject Areas :Ebrahim Baramzadeh 1 , Seyed Ali Vaez 2 , Ghasem Rekabdar 3
1 - Department of Accounting, Khorramshahr International Branch, Islamic Azad University, Khorramshahr, Iran.
2 - Department of Accounting, Shahid Chamran University, Ahvaz, Iran.
3 - Department of Mathematics, Abadan Branch, Islamic Azad University, Abadan, Iran.
Keywords: Deviation from industry norms, Firm risk, Audit risk, Audit fees, Auditor characteristics,
Abstract :
Objective: This study examines the effect of deviation from industry norms (DIN) on audit fees. Further, this study examines the moderator role of external auditors’ characteristics (such as size, industry expertise and gender). Method: This study use a sample of 1,128 observations from companies listed on the Tehran Stock Exchange during the years 2014 to 2021. This information, which is in the form of an unbalanced panel (due to the non-disclosure of audit fees in some years), has been extracted from the financial statements and the board of directors reports at the comprehensive database of the Securities and Exchange Organization of Iran (CODAL). Results: The findings of this study show that firms with higher DIN pay more audit fees than other firms. By investigating auditors’ characteristics, the findings suggest that auditors’ industry expertise has a negative and significant impact on the relationship between DIN and audit fees. In other words, the positive effect of DIN on audit fees is less pronounced when firms are audited by industry expert auditors. However, the impact of auditors’ size and gender on the relationship between DIN and audit fees is not significant. Conclusion: The results indicate that DIN is related to an increase in corporate risk, which in turn can affect audit risk and consequently audit fees. Also, industry expert’s auditors consider less audit risk and lower audit fee for such firms.
