Actividades sugeridas

Empirical evidence on the independence of audit committees is consistent with the agency perspective where independent members are seen as crucial contributors to the effectiveness of audit committees in discharging their oversight roles.

Using the US context, Carcello et al. (2002) examine the impact of some of the board of directors and audit committee characteristics on audit fees. They use a sample of 258 non-financial firms listed in the Fortune 1000 for the year ended

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interests of the owners and forms the committees (one of which is the audit committee) and the management board which is responsible for operating the business and setting its long-term strategy.

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March 1993 and find that audit committee independence is positively related to audit fees. This finding does not hold, however, when they combine both of the audit committee and board variables in the same model. Therefore, Carcello et al. (2002) suggest that in the presence of the board, audit committees do not provide an incremental role.

Similarly, Abbott et al. (2003a) use a sample of 492 US non-regulated firms that are audited by Big 5 auditors and have filed their proxy statements with the SEC for the period between February and June 2001. They examine the association between audit fees and several audit committee characteristics and argue that “independent audit committee directors demand greater levels of audit assurance” leading auditors to increase their audit scope and in turn their audit fees. Their results are consistent with their argument where they find that audit committees which comprise solely of independent directors are associated with higher audit fees.

In a more recent study, Lee and Mande (2005) investigate the impact of some audit committee characteristics on audit fees and non-audit fees. Using a sample of 780 US firms in the year ended December 2000, they contend that unlike inside and grey members, outside directors are more independent of management and therefore are more capable of enhancing audit committee effectiveness. Their findings are robust to the usage of both single and simultaneous equation regressions and reveal a positive association between independent audit committee directors and audit fees. Non-audit fees, however, are only found to be related to the composite measure of independence and number of committee meetings when regressed in a single equation regression.

Boo and Sharma (2008) extend the literature and investigate the association between internal governance mechanisms and audit fees, and how this association

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can be affected by regulatory oversight. To observe the differential effect of regulations, they use a sample of 469 US listed firms in the year 2001, by which 252 firms are regulated (financial and utility) and 217 are non-regulated. Their results reveal that the association between audit committee independence and audit fees is stronger for non-regulated firms than that for regulated ones.

Providing evidence from an emerging country, Rustam et al. (2013) and Hassan and Naser (2013) examine the effect of audit committee independence on audit fees and find inconsistent results. Rustam et al. (2013) use a sample of 50 firms for the period between 2007 and 2011 and employ a dichotomous variable having the value of one if at least one executive member serves on the audit committee. They find a significant and negative relationship with audit fees, concluding that the role of the audit committee is complementary to that of the auditor in monitoring management. Hassan and Naser (2013), however, use the percentage of independent directors on the audit committee as a proxy for independence. Based on a sample of 30 non-financial firms listed on the Abu Dhabi Securities Exchange (ADX), they find a negative association between audit committee independence and audit fees. As such they suggest that an increase in audit committee independence will reduce control risk which in turn reduces the audit scope and leads to lower levels of audit fees.

Addressing the concerns raised by regulators and academics on the effect of non-audit services on the client-auditor relationship, Abbott et al. (2003b) investigate the impact of audit committee characteristics on the ratio of non-audit service fees to audit fees. Using a sample of 538 US firms which filed proxies with the SEC between February and June 2001, they find that independence of audit committees is an important characteristic that contributes to the effectiveness of the committees in

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enhancing auditor independence through reducing non-audit fees relative to audit fees. The findings of Abbott et al. (2003b) are consistent with those of Parkash and Venable (1993) who find that firms may reduce the purchase of non-audit services from their incumbent auditors in an attempt to reduce agency costs and enhance audit quality.

Interestingly, a recent study by Zaman et al. (2011) provides evidence from the UK context and fills the gap found in the auditor remuneration literature. They examine the association between governance quality on the one hand and audit fees and non-audit service fees on the other. Based on a sample of 540 FTSE 350 non- financial firms for the period between 2001 and 2004, they find that audit committee independence has a positive association with audit fees and a negative one with non- audit fees. Zaman et al. (2011) further investigate the relationship between audit committee independence and a dichotomous variable having the value of one if a firm’s non-audit service fees are greater than its audit fees. Their results also reveal a negative association suggesting that independent directors on the audit committee are more likely to decrease the purchase of non-audit services.

Basiruddin (2011), however, uses a similar sample of 674 FTSE 350 firms for the period between 2005 and 2008 and finds no evidence of any relationship between independent directors on the audit committee and either audit fees or non- audit service fees.