Univrsity Of Tehran Press Accounting and Auditing Review 2645-8020 27 1 2020 05 21 Investigating the Impact of Institutional Ownership Concentration on the Relationship between Board Independence and Audit Services Fees: Contraposition Supply & Demand Based Perspectives Investigating the Impact of Institutional Ownership Concentration on the Relationship between Board Independence and Audit Services Fees: Contraposition Supply & Demand Based Perspectives 32 59 76571 10.22059/acctgrev.2020.275931.1008123 FA Mohammad Hassani Assistant Prof., Department of Accounting & Auditing, Faculty of Management, North Tehran Branch, Islamic Azad University, Tehran, Iran. Hamideh Barkhordari MSc., Department of Accounting & Auditing, Faculty of Management, North Tehran Branch, Islamic Azad University, Tehran, Iran. Journal Article 2019 02 15 <strong>Objective:</strong> This research analyzed the impact of institutional ownership concentration on the relation between board independence and audit services fees to distinguish between supply & demand based perspectives, and also misalignment effect & expropriation effect hypotheses. <br /><strong>Methods:</strong> Statistical analyses include 118 firms listed in the Tehran Securities & Exchange over the period 2013 to 2018; thereby, 708 firm-year observations have analyzed. Research hypotheses have investigated through multivariate regression models using panel data and generalized least squares method. <br /><strong>Results:</strong> According to the results, there is a meaningful and positive relationship between board independence and audit services fees. In addition, there is a meaningful and negative relationship between institutional ownership concentration and audit services fees. Findings show that institutional ownership concentration has meaningful and negative impact on the relation between board independence and audit services fees. Also, these results confirmed at the high level of board independence and high level of ownership concentration. Other findings show that there is no relationship between auditor size and audit services fees. While firm size, debt ratio, receivables and inventories ratios, and audit opinion have a meaningful and positive relationship with audit services fees; but, current ratio and return on assets have meaningful and negative relationship with audit services fees. <br /><strong>Conclusion:</strong> The positive relationship between board independence and audit services fees is consistent with the demand based perspective of auditing services and complementary approach; also, the negative relationship between institutional ownership concentration and audit services fees is consistent with the supply based perspective of auditing services and substitutive approach. Based on the findings, the negative impact of institutional ownership concentration on the relationship between board independence and audit services fees is consistent with the expropriation effect hypothesis. As a whole, the research results can be useful for financial information users in determining the effective factors on audit fees. <strong>Objective:</strong> This research analyzed the impact of institutional ownership concentration on the relation between board independence and audit services fees to distinguish between supply & demand based perspectives, and also misalignment effect & expropriation effect hypotheses. <br /><strong>Methods:</strong> Statistical analyses include 118 firms listed in the Tehran Securities & Exchange over the period 2013 to 2018; thereby, 708 firm-year observations have analyzed. Research hypotheses have investigated through multivariate regression models using panel data and generalized least squares method. <br /><strong>Results:</strong> According to the results, there is a meaningful and positive relationship between board independence and audit services fees. In addition, there is a meaningful and negative relationship between institutional ownership concentration and audit services fees. Findings show that institutional ownership concentration has meaningful and negative impact on the relation between board independence and audit services fees. Also, these results confirmed at the high level of board independence and high level of ownership concentration. Other findings show that there is no relationship between auditor size and audit services fees. While firm size, debt ratio, receivables and inventories ratios, and audit opinion have a meaningful and positive relationship with audit services fees; but, current ratio and return on assets have meaningful and negative relationship with audit services fees. <br /><strong>Conclusion:</strong> The positive relationship between board independence and audit services fees is consistent with the demand based perspective of auditing services and complementary approach; also, the negative relationship between institutional ownership concentration and audit services fees is consistent with the supply based perspective of auditing services and substitutive approach. Based on the findings, the negative impact of institutional ownership concentration on the relationship between board independence and audit services fees is consistent with the expropriation effect hypothesis. As a whole, the research results can be useful for financial information users in determining the effective factors on audit fees. https://acctgrev.ut.ac.ir/article_76571_ba110c8ac0b8feab9d701c05cc40b7f2.pdf