The Relationship between Abnormal Audit Fees and Real Income Smoothing with Emphasis on the Role of Ownership Structure

Subject Areas : Corporate governance

Farideh Mortazavi Ghorbani ¹ , Rasoul Baradaran Hasanzadeh ²

1 - MSc. Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran
2 - Associate Prof, Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran.

Received: 2025-07-07 Accepted : 2025-08-20 Published : 2025-10-07

Keywords: Abnormal Audit Fees, Real Income Smoothing, Ownership Structure.,

Abstract :

Objective: Given the concerns of investors regarding real income smoothing, this study examined the relationship between abnormal audit fees and real income smoothing, with an emphasis on the role of ownership structure.

Method: This study in terms of target is applied and the method is expost facto research. The sample used in our research includes 101 firms listed on the Tehran Stock Exchange during the period 2017-2023. In this study, to measure the abnormal audit fees, from the Simunic (1980) model, according to the research of Cohen and Zarvin (2008), the combination of three measures of abnormal operating cash flow, abnormal production, and abnormal discretionary expenses were used to measure real income smoothing and to measure the ownership structure, the indicators of institutional ownership, managerial ownership, and concentration of ownership were used. In this study to test the hypothesis logistic regression is used.

Findings: The results of this study show that there is a positive and significant relationship between abnormal audit fees and real income Smoothing. Also, the results of this study show that institutional ownership, managerial ownership, and concentration of ownership have a negative and significant impact on the relationship between abnormal audit fees and real income smoothing.

Conclusion: As the amount of institutional ownership, board members' ownership and ownership concentration increases, the positive relationship between auditor's abnormal fees and real profit smoothing weakens.

References:

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