Audit Committee Characteristics and Fee Discounting for Initial Audit Engagements

  • 蔡 煜程

Student thesis: Master's Thesis


This paper examines whether fee discounting for initial audit engagements still exists in Taiwan and how characteristics of audit committees smooth down effects of low-balling As a result of high passing rate in obtaining accountant licenses and the policy of cancelling the audit fee floor it has been popular that accountants tend to adopt strategies of low-balling for establishing the long-term relationship with clients in Taiwan for a long time However they may neglect required works or reach a compromise with the management if they don’t charge sufficient fees Therefore it can lead to issues of impairing independences and audit quality On the other hand audit committees play key roles in maintaining the corporate governance Their works involve the selection and compensation of accountants as well If audit committees are more effective they should be devoted to achieving goals of overseeing quality of financial reporting or internal control more likely As a result they may decide a higher level of audit fees because they also rely on external auditors’ assistance The sample comprises all publicly-traded companies ranging between 2003 and 2016 in Taiwan Stock Exchange Running regressions with different types of changes we find that fee discounting for initial audit engagements still exists in Taiwan so far Consistent with the hypothesis we also prove the relations that effects of fee discounting will be smoothed down if the ratio of expertise in finance or accounting is high in audit committees However this finding is certified only in the group of high audit fees As expected we find evidence in the association between characteristics of audit committees and effects of fee discounting
Date of Award2018 Jun 28
Original languageEnglish
SupervisorHua-Wei Huang (Supervisor)

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