Agency Costs & Independent Audit Services Pricing


Theorithecally the existence, growth and diversity of agency relation
is expected to effect on audit pricing by affecting size, complexity and
risk of the auditee. But no adequate evidences have been documented.
This study investigates the association of audit services pricing with
agency costs. For this purpose, agency costs’ factors are used as
independent variables and audit fee is used as dependent variable. The
purpose of this study is to find whether there is a significant
relationship between agency costs and audit services pricing. The
necessary information for testing correlation of variables through a
regression model gathered from production companies of Tehran
Stock and Exchange (TSE) for the financial year of 2005. The results
of this study show that for the some of independent variables there is a
relationship between agency costs and audit services pricing and on
this basis it is possible to propose that there are agency costs or
conflict of interests among various groups of involving parties in
corporations in Iran and, this conflict affects audit services pricing.