Family Ownership, Auditor Choice and Audit Fees: Evidence from Hong Kong

2018 ◽  
Vol 8 (1) ◽  
pp. 1
Author(s):  
Adrian C.H. Lei ◽  
Samuel W. K. Lam
Keyword(s):  
Hong Kong ◽  
Panel Data ◽  
Audit Committee ◽  
Family Firms ◽  
Audit Fees ◽  
Data Set ◽  
Family Control ◽  
Auditor Choice ◽  
Multiple Directorships ◽  
The Impact

Purpose –The primary purpose of this paper is to examine the impact of family control/ownership on auditor choice and audit fees in Hong Kong. Besides, this paper also addresses the impact of multiple directorship of audit committee members on these two external auditing dimensions.Design/methodology/approach –Panel data technique is used to perform analysis. The unbalanced panel data set consists of 2,724 firm-year observations for nine years from year 2001 to 2009.Findings –The results indicate that family firms have a higher likelihood to appoint Big 5 auditors, it supports the signaling hypothesis. Contrasting the perceived higher audit risk, they incur lower audit fees. The results also show the independent audit committee members with multiple directorships are not affected by their busyness. Our results are also robust to the alternative definition of family firms and by using the sub-sample within 2004 - 2009. We also find that the firms controlled by recognized Big family in Hong Kong society incur higher audit fees but no support for family firm incurring higher non audit fee.Originality/value–First, our paper responds to the recent call for research for auditor choice and audit fees within the context of emerging economies. Secondly, this paper also explores other determinants of auditor choice and audit fees in HK such as the characteristics of the audit committee and multiple directorships. Thirdly, our findings contribute to the family firms’ literature by shedding light on family firms do enhance their external auditing function to improve the credibility of financial reporting of the firms which is expected to help investors and public in HK to know more about the effect of family control on the external auditing to protect their interest. The findings in this paper are also valuable to regulators who might concern the corporate governance and informativeness in family firms. 

scholarly journals Family control, audit committees and audit fees

2010 ◽  
Vol 7 (3) ◽  
pp. 73-85 ◽  
Author(s):  
Sidney Leung ◽  
Ran Wang
Keyword(s):  
Hong Kong ◽  
Audit Committee ◽  
Positive Association ◽  
Audit Fees ◽  
Audit Committees ◽  
Fiscal Year ◽  
Audit Risk ◽  
Family Control ◽  
The Impact

This paper examines the impact of family control on audit effort and audit risk as proxied by audit fees, the relation between the quality of the audit committee (AC) and audit fees, and how family control influences the association between AC quality and audit fees. Using a sample of Hong Kong companies from the 2005/06 fiscal year, we find that family-controlled firms have lower audit fees. The results also show a positive association between AC quality and audit fees in Hong Kong. Moreover, the association of higher AC quality with higher audit fees is stronger in family-controlled firms than in non-family-controlled firms. Collectively, our findings suggest that audit committees in family-controlled firms require a higher degree of external audit effort than do those in non-familycontrolled firms.

The effect of family control on audit fees during financial crisis

2020 ◽  
Vol 35 (5) ◽  
pp. 645-665
Author(s):  
Jihad Al-Okaily
Keyword(s):  
Family Involvement ◽  
Fixed Effects ◽  
Family Firms ◽  
Audit Fees ◽  
Fixed Effect Model ◽  
Policy Implications ◽  
Content Type ◽  
Family Control ◽  
Effect Model ◽  
The Impact

Purpose The purpose of this study is to empirically examine the effect of family involvement in ownership, management and directorship on audit fees during the crisis and non-crisis periods. Design/methodology/approach Following Anderson and Reeb (2003), this paper uses a two-way fixed effect model to examine the impact of family control on audit fees in crisis and non-crisis periods. The fixed effects include dummy variables for each year and each industry code in the sample. Findings This paper finds that during normal economic periods, family firms pay lower audit fees relative to non-family firms because of the incentive alignment or monitoring effect. While, during crisis periods, family firms pay higher audit fees because of the shareholder expropriation effect. Research limitations/implications The results reported in this paper have both practical and policy implications for the demand and supply of audit services to firms having different ownership structures. Originality/value This is the first study of its kind to examine the effect of family ownership and involvement on audit fees during the crisis period.

scholarly journals The impact of ownership structure on firm performance: The role of chairman and CEO in Portugal

2017 ◽  
Vol 13 (2) ◽  
pp. 6-19 ◽  
Author(s):  
Lious Agbor Tabot Ntoung ◽  
Jorge Eduardo Vila Biglieri ◽  
Helena Maria Santos de Oliveira ◽  
Benjamim Manuel Ferreira de Sousa ◽  
Ben C. Outman ◽  
...  
Keyword(s):  
Ownership Structure ◽  
Family Firms ◽  
Corporate Performance ◽  
Active Management ◽  
Set Covering ◽  
Data Set ◽  
Family Control ◽  
Listed Firms ◽  
The Family ◽  
The Impact

This analysis investigates how family ownership structure affects the corporate performance of Portuguese listed firms using a panel data set covering the period from 2006 to 2014. Three characteristics of family firms (such as active management, active founder or heir and second blockholder) were examined with respect to the corporate performance. The main finding is that family firms over perform non-family in term productivity and profitability. This indicates that companies that have total family control are more productive and profitable than those market favour firms that the family does not have total ownership. Specifically, family firms with active founders perform better whereas those with active heirs significantly outperform compared to family firms with passive owners or heirs. Family firms with a family member in the company as either CEO or Chairman create more value and are more profitable than non-family firms. Family firms with descendant as CEO perform better meanwhile family firms with the founder as CEO significantly outperform family firms with Outside CEO for corporate performance. Lastly, the presence of a second blockholder who owns between 5-10% of the voting right enhances the corporate performance of the family firms as it counterbalances the controlling shareholder from unnecessary behaviours.

The Impact of ICT Investment on Establishment Productivity

2003 ◽  
Vol 184 ◽  
pp. 99-110 ◽  
Author(s):  
Thomas Zwick
Keyword(s):  
Panel Data ◽  
Unobserved Heterogeneity ◽  
Data Set ◽  
Omitted Variable Bias ◽  
Lagged Effects ◽  
Variable Bias ◽  
Employee Characteristics ◽  
The Impact ◽  
Establishment Panel Data

This paper finds substantial effects of ICT investments on productivity for a large and representative German establishment panel data set. In contrast to the bulk of the literature also establishments without ICT capital are included and lagged effects of ICT investments are analysed. In addition, a broad range of establishment and employee characteristics are taken account of in order to avoid omitted variable bias. It is shown that taking into account unobserved heterogeneity of the establishments and endogeneity of ICT investments increases the estimated lagged productivity impact of ICT investments.

scholarly journals The Overseas Experience of Audit Committee and Audit Fees: Empirical Evidence from China

Complexity ◽  
2021 ◽  
Vol 2021 ◽  
pp. 1-16
Author(s):  
Chengai Li ◽  
Lin Pan ◽  
Meilan Chen
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Learning Experience ◽  
Accounting Information ◽  
Audit Fees ◽  
Positive Influence ◽  
Positive Role ◽  
Quality Of Accounting Information ◽  
The Impact

The complexity of audit committee experience, including the overseas experience, has an important impact on corporate governance. In this paper, we study the impact of the overseas experiences of the members of audit committee on audit fees. Our empirical analysis and results show that the audit committee overseas experience can significantly increase audit fees. Further, the positive influence of the audit committee overseas experience on audit fees is more pronounced in state-owned enterprises and regions with weak marketization. In addition, we divide the overseas experience into overseas learning experience and overseas working experience. We find that both types of experience present in the audit committee significantly increase the audit fees. Finally, we find that the audit committee overseas experience can significantly improve the quality of accounting information and play a positive role in corporate governance.

scholarly journals Tourism under the Early Phase of COVID-19 in Four APEC Economies: An Estimation with Special Focus on SARS Experiences

2020 ◽  
Vol 17 (20) ◽  
pp. 7543
Author(s):  
Bao-Linh Tran ◽  
Chi-Chung Chen ◽  
Wei-Chun Tseng ◽  
Shu-Yi Liao
Keyword(s):  
Hong Kong ◽  
New Zealand ◽  
Fixed Effects ◽  
Negative Impact ◽  
Asia Pacific ◽  
International Tourism ◽  
Special Focus ◽  
Tourism Demand ◽  
Data Set ◽  
The Impact

This study examines how experience of severe acute respiratory syndrome (SARS) influences the impact of coronavirus disease (COVID-19) on international tourism demand for four Asia-Pacific Economic Cooperation (APEC) economies, Taiwan, Hong Kong, Thailand, and New Zealand, over the 1 January–30 April 2020 period. To proceed, panel regression models are first applied with a time-lag effect to estimate the general effects of COVID-19 on daily tourist arrivals. In turn, the data set is decomposed into two nation groups and fixed effects models are employed for addressing the comparison of the pandemic-tourism relationship between economies with and without experiences of the SARS epidemic. Specifically, Taiwan and Hong Kong are grouped as economies with SARS experiences, while Thailand and New Zealand are grouped as countries without experiences of SARS. The estimation result indicates that the number of confirmed COVID-19 cases has a significant negative impact on tourism demand, in which a 1% COVID-19 case increase causes a 0.075% decline in tourist arrivals, which is a decline of approximately 110 arrivals for every additional person infected by the coronavirus. The negative impact of COVID-19 on tourist arrivals for Thailand and New Zealand is found much stronger than for Taiwan and Hong Kong. In particular, the number of tourist arrivals to Taiwan and Hong Kong decreased by 0.034% in response to a 1% increase in COVID-19 confirmed cases, while in Thailand and New Zealand, a 1% national confirmed cases increase caused a 0.103% reduction in tourism demand. Moreover, the effect of the number of domestic cases on international tourism is found lower than the effect caused by global COVID-19 mortality for the economies with SARS experiences. In contrast, tourist arrivals are majorly affected by the number of confirmed COVID-19 cases in Thailand and New Zealand. Finally, travel restriction in all cases is found to be the most influencing factor for the number of tourist arrivals. Besides contributing to the existing literature focusing on the knowledge regarding the nexus between tourism and COVID-19, the paper’s findings also highlight the importance of risk perception and the need of transmission prevention and control of the epidemic for the tourism sector.

Board gender diversity and US corporate bonds

2019 ◽  
Vol 15 (5) ◽  
pp. 771-791 ◽  
Author(s):  
Renee M. Oyotode-Adebile ◽  
Zubair Ali Raja
Keyword(s):  
Panel Data ◽  
Propensity Score ◽  
Design Methodology ◽  
Gender Diversity ◽  
Data Set ◽  
Content Type ◽  
Gender Diverse ◽  
Board Gender Diversity ◽  
The Impact ◽  
Women Participation

Purpose The purpose of this paper is to examine the impact of board gender diversity on bond terms and bondholders’ returns. Design/methodology/approach The authors perform pooled OLS regression, simultaneous regressions and propensity score matching to a panel data set of bond data for 319 US firms from 2007 to 2014. Findings The authors find that firms with gender-diverse boards have lower yields, higher ratings, larger issue size and shorter maturity. They also find that bondholders require fewer returns from firms with gender-diverse boards. However, the effect is more pronounced when women, constitutes at least 29.67 percent of the board. Originality/value This analysis supplements the findings that board gender diversity is essential for bondholders. It shows that bondholders should look at board gender diversity as a criterion to invest because bonds issued by firms with gender-diverse board have less risk. For practitioners, this study shows that more women participation on boards leads to a reduction in borrowing costs.

Auswirkungen von Mehrfachmandaten deutscher Vorstands- und Aufsichtsratsvorsitzender auf den Unternehmenserfolg / The Impact of Multiple Board Memberships of CEOs and Chairmen of Supervisory Boards on Corporate Performance in Germany

2010 ◽  
Vol 230 (5) ◽  
Author(s):  
Benjamin Balsmeier ◽  
Achim Buchwald ◽  
Heiko Peters
Keyword(s):  
Panel Data ◽  
Corporate Performance ◽  
Supervisory Board ◽  
Data Set ◽  
Supervisory Boards ◽  
External Management ◽  
The Impact ◽  
Public Criticism

SummaryMembers of management boards as well as supervisory boards often attract public criticism when they are simultaneously active in several other boards. We use a panel data set of the biggest German corporations for the period from 1996-2006 to estimate the impact of multiple board memberships of the CEO and the chairman of the supervisory board on corporate performance. The results suggest a positive and inverse U-shaped relation between the number of external supervisory board seats of the CEO and corporate performance. Chairmen of supervisory boards who simultaneously serve on external management boards tend to improve the performance of the controlled firm. Further external supervisory board seats of the chairman of a supervisory board do not seem to have any influence on corporate performance, though.

The Impact of Corporate Governance Mechanisms on the Relationship Between Cash Holdings and Audit Fees in Egyptian Listed Companies

2019 ◽  
Vol 9 (2) ◽  
pp. 314
Author(s):  
Eman Abdel-Wanis
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Panel Data Analysis ◽  
Cash Holdings ◽  
Audit Fees ◽  
Governance Mechanisms ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
The Impact ◽  
The Relationship

This paper explores the impact of corporate governance mechanisms on the nature of the relationship between cash holdings and audit fees, which helps provide an opportunity to identify whether these mechanisms enable to mitigate agency problems, and thus lower audit fees through a sample of 78 Egyptian listed firms in EGX 100 during the period 2014-2016 using panel data analysis. Results indicated that cash holding increases auditing fees. The board characteristics affect negatively on the relationship between cash holdings and audit fees. Also, ownership structure affects negatively on the relationship between cash holdings and audit fees. As well audit committee affects negatively on the relationship between cash holdings and audit fees. There results support the view that corporate governance mitigate on the relationship between cash holdings and audit fees.

Better with age: financial reporting quality in family firms

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Roberto Tommasetti ◽  
Marcelo Á. da Silva Macedo ◽  
Frederico A. Azevedo de Carvalho ◽  
Sergio Barile
Keyword(s):  
Financial Reporting ◽  
Family Firms ◽  
Reporting Quality ◽  
Management Control ◽  
Financial Reporting Quality ◽  
Content Type ◽  
Family Control ◽  
A Value ◽  
The Family ◽  
The Impact

Purpose The purpose of this paper is to contribute to the literature on financial reporting quality (FRQ) within family firms (FFs), assessing whether longevity can determine a different propensity to earning management (EM) behaviors. Design/methodology/approach The sample, composed by Italian and Brazilian listed family (and non-family) firms, is segregated into old and young. For each subsample, unsigned discretionary accruals are calculated, using two different EM models. A linear regression model is then proposed, together with some robustness tests, to confirm the research hypothesis. Findings The outcome is that, within FFs, the entrenchment effect seems to be diminishing with the company’s age, up to become lower than the alignment effect. With some caveat, research also demonstrates that old FFs are more propense to supply higher FRQ than any other subsample group. Research limitations/implications The authors demonstrated that, in terms of EM decision process, FFs become virtuous just with time. More research is needed to evaluate the impact of the share and management control separately and to analyze different generation segmentation. Practical implications This paper could help non-family stakeholders, as it shows that different company types (family vs non-family), at a different stage of the life-cycle (young vs old) have a different attitude toward FRQ. On the other hand, family owners could exploit the longevity as a value driver. Originality/value This paper suggests that agency theory and socio-emotional theory are complementary in explaining the family control role in earnings management decisions. The study also contributes to the debate of FF homogeneity and on risk behavior in FFs, often portrayed as having a patient capital.

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