Stakeholder management and audit fees

Document Type : Research Paper


1 Department of Accounting, Shahid Bahonar University of Kerman, Kerman, Iran

2 Department of Accounting, University of Meybod, Meybod, Iran


The main purpose of this study is to investigate the relationship between corporate stakeholder management and audit fees. In addition, the impact of management compensation and audit quality has been tested on this relationship. This article uses regression analysis to test its hypotheses to a sample of 1,626 firms -year observations in the Tehran Stock Exchange (TSE) during 2011-2020. Results show a negative association between stakeholder management and audit fees. It can be concluded that effective stakeholder management reduces client risks. This finding is also consistent with agency theory that predicts agency problems lead to higher audit fees and vice versa. We also find that more management compensation and higher audit quality strengthen the negative association between stakeholder management and audit fees. Therefore, these variables can be considered important mechanisms to strengthen more effective stakeholder management. This study is the first study that empirically examines the association between stakeholder management and audit fees. Moreover, the moderating impact of management compensation and audit quality has been tested on the association between stakeholder management and audit fees. Finally, we use an interdisciplinary approach and use management literature to contribute to audit fee literature.


Main Subjects

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