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This study aims to examine whether firms that appear to exhibit high sustainable outputs are more likely to pay higher audit fees than firms without such outputs.

The sustainability outputs are measured using a sustainable product portfolio consisting of four products: clean energy products, eco-design products (EDP), environmental products (EP) and sustainable building projects (SBP). The audit fee variable is measured by the natural logarithm of the total amount of audit fees. The study tests two models of the association between these outputs and audit fees; Model 1 tests this association in the absence of the moderating variable (sustainability committee), and Model 2 tests the association in the presence of the moderating variable.

An analysis of data on 261 European firms from the Refinitiv Eikon database from 2010 to 2019 shows that high sustainability outputs are significantly and positively associated with audit fees. More importantly, this association is moderated by the presence of a board-level sustainability committee, suggesting that this type of committee reflects a factor considered by auditors in their audit risk assessment practices. The findings indicate that in Model 1, one (EP) out of four variables has a significant and positive association with audit fees, while in Model 2 and in the presence of sustainability committee, two variables (EP and EDP) have a significant and negative association with audit fees. However, the robust analysis shows that three variables (EP, EDP and SBP) have significant and negative associations with audit fees.

The study findings have important implications for policymakers, auditors and firms’ managers. For policymakers, the findings provide support for the argument that sustainable attitudes incentivise firms to manage sustainable product profiles more effectively. As such, policymakers should incentivise firms to establish a sustainability committee and regulate its role and responsibilities. Auditors should coordinate with the sustainability committee to facilitate audit efforts and reduce audit fees.

Understanding the relationship between sustainable products and audit fees will allow firms to improve their portfolio of sustainable products. In addition, other social implications of this study relate to improving relationships with society by establishing a sustainability committee that is responsible to communicate with that society.

The results support the argument that firms should manage sustainable product portfolios more effectively. In addition, the results of the study highlight the importance of a new variable as a moderator, the sustainability committee, which has not been examined before.

The literature on the influence of audit committees (AC) and cosmetic accounting (CA) is scarce. AC plays a unique and vital role in boosting earnings reliability in countries with weaker application of accounting standards or weaker legal protection for investors. AC, therefore, are considered to be one of the essential tools available to directors in supervising management decisions regarding financial reporting. This paper aims to examine the influence of AC characteristics (ACC) on CA and how this relationship is moderated by the audit fee.

This study used probit regression to analyze 1,218 firm-year observations of listed companies in Tehran Stock Exchange from 2014 to 2020.

The results show that AC financial accounting expertise, AC independence, female AC membership and AC tenure were negatively related to CA. The negative relationship is highly pronounced when a firm incurs higher audit fees, and audit fees moderate the relationship between ACC and CA. Results for the robustness checks show that only AC independence was significant, and the results of other characteristics were not significant.

This research was conducted in an Iranian setting where the formation of ACs is on the verge of regulation; therefore, the data used for the study only contains the seven-year period of ACs’ statutory activity. In addition, a lack of consensus on the precise measures of an AC’s effectiveness could be considered as a restrictive factor.

The findings provide an initial insight into the effect AC on CA and moderating effect of audit fee on the relationship between ACC and CA.

This study aims to investigate the impact of audit fees on audit quality, the impact of audit quality on firm value and whether these effects are conditional on audit tenure by bringing evidence from an emerging market.

Different regression techniques are used, such as logistic regression, probit regression, ordinary least squares regression and fixed effects regression. The authors used panel data of 80 nonfinancial Egyptian-listed firms over 2016–2020.

The authors found a significant positive relationship between audit fees and audit quality and a significant positive relationship between audit quality and firm value. Furthermore, the authors found that the positive relationship between audit fees and audit quality is less pronounced for higher audit tenure firms. Finally, the authors also found that the positive relationship between audit quality and firm value is stronger for lower audit tenure firms.

To the best of the authors’ knowledge, this is the first study to bring evidence from an emerging African market about the joint association between audit tenure, audit fees, audit quality and firm value. It provides beneficial insights to regulators regarding the possibility and the benefits of improving audit quality, which is critically needed in contexts with weak governance systems.

This study aims to examine the association between non-audit fees and audit quality by using the context of gender-diverse audit committees. Further, the authors assess whether this link is moderated by industry-specialist auditors.

This study used non-financial FTSE-350 firms over the period of seven years. In addition, the authors use ordinary least squares regression to test the research hypotheses.

The authors find that female directors on audit committees are negatively related to non-audit fees, suggesting that non-audit fees reduce audit quality. Moreover, the results indicate that industry-specialist auditors positively moderate the link between gender-diverse audit committees and non-audit fees. This suggests that non-audit fees improve audit quality when the auditor is an industry-specialist.

The study does not support blanket restrictions on non-audit fees. It recommends regulators to consider industry expertise of auditors when devising non-audit fee restrictions. Moreover, the findings of this study have implications for firms aiming to understand whether non-audit fees could be used for enhancing audit quality.

By using the context of female directors on audit committees, the authors conclusively assess the link between non-audit fees and audit quality. Further, this study provides a more robust evidence on whether industry-specialist auditors affect the relationship between non-audit fees and audit quality.

Prior research finds evidence that audit quality is positively associated with the joint purchase of tax nonaudit services (NAS) and concludes that jointly provided tax services result in audit-related knowledge spillovers that lead to improved audit quality. We extend this line of research. We examine the relation between auditor-provided tax services and restatements and determine whether this relation differs when the auditor is a small or large accounting firm. We also examine whether the Securities Exchange Commission’s restrictions on certain tax consulting practices (SEC, 2006) altered this relation. Specifically, we measure whether the probability of financial statement restatements varies with (1) variation in accounting firm size (measured as PCAOB annually inspected firms versus PCAOB triennially inspected firms), and (2) the joint provision of audit and tax services. We find a negative relation between auditor-provided tax services and restatements which is consistent with prior research. We also find that this relation is significantly more negative when the auditor is a small accounting firm. Finally, we find that the lower probability of a restatement associated with the joint provision of audit and tax services persists regardless of auditor size after the SEC-imposed restrictions on certain tax consulting services in 2006. Our study provides evidence that accounting firms, and particularly small accounting firms, benefit from knowledge spillovers when jointly providing audit and tax services and these benefits lead to improved audit quality. Prior research concludes that large auditors provide higher audit quality and that the provision of tax services improves audit quality. Our results provide evidence that audit quality improvements are greater for small auditors and their clients. This improvement narrows that audit quality gap between large and small auditors. We do not find evidence that the SEC’s restrictions on certain tax consulting services altered the relation between audit quality and tax services.

This study aims to investigate the association between executives with foreign backgrounds and the audit fees paid by the Chinese-listed firms over the period from 2010 to 2020.

To examine the association between executives’ foreign experience and audit fees, this study constructs the following empirical model: Lnfee_i,t = β₀ + β₁Foreign background_i,t + ∑β_j Control_i,t + YearFE + IndFE + ε_i,t (1).

This study finds that auditors charge higher fees for firms hiring more executives with foreign backgrounds. The results are robust to a battery of robustness checks, including fixed effects, alternative measures of independent variable, controlling for other characteristics of executives and auditors and entropy balancing method.

This study sheds light on how executives’ foreign backgrounds affect audit fees, enriching the literature on executive heterogeneity and audit fees and providing important implications for audit practitioners.

This paper aims to examine the effect of carbon emissions on audit fees. The authors hypothesize that firms in cities with higher carbon emission levels have lower reporting transparency, higher return volatility or are subject to higher reputation risk, causing them to be charged higher audit fees for auditing services.

The authors use panel data of 25,960 firm-year observations from a sample of Chinese firms. The carbon emission data for each Chinese city are obtained from the China Emission Accounts and Datasets for Emerging Economies. This paper adopts a multiple regression model to study the impact of carbon emissions on audit fees.

The authors find that firms located in cities with higher carbon emission levels and firms with more carbon emissions are charged, on average, a higher audit fee. This audit fee effect of carbon risk is transmitted by lessened information transparency and elevated financial risk within these firms. This paper shows that auditors consider carbon risk in their audit fee decisions and other factors that could influence audit risk and effort.

This study draws a connection between carbon emissions and audit fees. It is especially relevant due to the increasing importance of environmental factors in the audit risk assessment. In addition, the findings suggest that a firm implementing a proactive environmental strategy benefits the economy and decreases the costs to the firm for services such as auditing.

This paper aims to examine the effect of conditional conservatism on audit fees and whether the firm’s engagement in sustainable practices moderates the relationship between conditional conservatism and audit fees.

Using a sample of 3,767 firm-year observations from 14 European Union countries over the period of 2006–2019, the authors adopt the ordinary least square estimator to perform a panel data analysis of the effect of conditional conservatism on audit fees, and the moderating role of the environmental, social and governance (ESG) scores on the relationship between conditional conservatism and audit fees.

The authors find that conditional conservatism has a significant negative effect on audit fees, suggesting that auditors charge lower audit fees on more conservative clients. The authors also find that firms engaging in ESG actions, whether combined or individual, pay higher audit fees. More interestingly, the authors provide evidence that the negative effect of conditional conservatism on audit fees is mitigated only when ESG performance is considered in combination. This implies that firms exhibiting less commitment to ESG sustainability practices are prone to paying reduced audit fees when engaged in more conservative reporting. The findings remain robust after conducting a battery of tests.

The findings of this study have practical implications for several parties, including companies, auditors and regulators. This study emphasizes the potential benefit associated with using conservative accounting practices in terms of shaping downward the amount of audit fees. However, it also highlights the importance of considering the additional audit costs associated with higher ESG scores when making decisions about implementing sustainable practices.

Unlike prior studies that investigate the direct impact of sustainable practices on audit fees, the present work contributes to the literature on the benefits and costs of ESG by examining the moderating role of ESG performance in the association between audit fees and conditional conservatism. To the best of the authors’ knowledge, this study is the first to examine this relationship. Theoretically, the research integrates the theories of audit risk and agency to provide a more comprehensive understanding of the drivers of audit fees.

This paper aims to examine whether female representation on boards is significantly associated with audit fees paid by top Egyptian listed companies.

The authors collect data on audit fees, board of directors' characteristics and financial data for the top 100 companies listed on the Egyptian Exchange (EGX100) for a period of six years. The authors employ an ordinary least squares regression model to capture the relationship between board diversity (i.e. the proportion of female board directors) and the natural logarithm of audit fees while controlling for firm and industry fixed effects as well as other known firm characteristics.

The authors find that audit fees are significantly associated with the proportion of females serving on firms' boards of directors. The findings suggest a complementary relationship between females on boards, as a quality-enhancing board attribute; and audit fees, as a proxy for audit effort and audit quality.

Limitations of this study arise first from the relatively small sample size, and second from the fact that inferences may be specific to the Egyptian context and similar markets.

The results have important implications for Egyptian policy makers and regulators in terms of board composition.

This study provides empirical evidence that further enforces the business case for women's empowerment and the impact of this on the effectiveness of corporate governance.

To the best of the authors’ knowledge, this is the first archival study to examine the association between female board representation and audit fees in Egypt.

This study aims to examine trends in audit committee characteristics of companies and associates characteristics subject to major change with a fee-based proxy for audit committee effectiveness.

The research adopts an empirical approach. Using descriptive and inferential statistics, observations for 253 Financial Times Stock Exchange 350 companies’ audit committee characteristics gathered from annual reports at the beginning and end of a five-year period are evaluated against averaged non-audit fees (NAF) as a proportion of total audit fees.

Audit committee composition shows an increased incidence of female membership and of members with previous audit experience. The increase in members with previous audit experience is more marked where this is gained with the incumbent auditor. An increase is also shown in chief financial officers with previous audit experience. Previous audit experience is associated with reduced NAF as a proportion of total fees. This is marked where audit experience has been gained with the incumbent auditor. These results suggest that the benefits of financial expertise gained from audit experience outweigh impairments to independence due to social ties. Nevertheless, other studies indicate concerns about independence are still well-founded.

This paper’s original contribution is to evaluate the potential effect of previous audit experience on those involved in audit committees in light of concerns raised in the literature and by regulators that external auditor independence should be maintained. The innovative fee-based proxy for audit committee effectiveness facilitates an evaluation as to which influence prevails.