The impact of corporate tax risk on audit fee

Document Type : Research Paper

Authors

1 Professor in Accounting, Shahid Bahonar University, Kerman, Iran

2 PhD Student in Accounting, Shahid Bahonar University, Kerman, Iran

Abstract

Auditors use several factors for pricing of audit services. Theoretically, corporate risk and complexity are the main factors affecting audit fees. The purpose of this study is to evaluate the impact of corporate tax risk on audit fees. This risk is quantificated through the company's effective tax rate. In this regard, if the effective tax rate is lower, tax avoidance is considered higher. For this purpose, a sample of 62 companies listed on TSE from 2009 to 2014 is selected. Research hypotheses have been examined using regression analysis. Results show that a significant negative (positive) correlation exists between effective tax rate (corporate tax risk) and audit fees. In other words, if the corporate tax risk is higher, audit fee will be more. Furthermore, the results reveal a significant positive relationship between firm size and reported loss with the audit fees and a negative significant relationship between financial leverage and unqualified audit opinion with the audit fees.

Keywords

References

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