Board Characteristics, Audit Committee Characteristics, and Audit Fees: Evidence from Jordan

  •  Hassan Kikhia    


The current study aims to examine the influence of characteristics of board of director (board independence, expertise, and size) and characteristics of audit committee (independence, expertise, and meeting frequency) on audit fees in Jordan, by using the sample of 112 non-financial companies which listed on Amman Stock Exchange (ASE) that meet the selection criteria and have the relevant financial data obtainable from 2010 until 2012 (336 observation). The results reveal significant and positive relationship between external audit fees and board independence, expertise and size, and these findings support ''demand side" arguments which suggest that board directors having independence, financial expertise and higher number of board size support the demand for high audit quality. The second finding reveals that both audit committee expertise and the number of audit committee meeting did not show any significant relationship with audit fees. On the contrary, audit committee independence is significantly positively associated with the level of audit fees, and this result goes in the same line with the study hypothesis. This study might alert the Jordanian regulators about the circumstances that the Jordanian companies' code is only just ticking the box. Therefore, the regulators must be more careful to make certain that this code is being applicable in terms of substance and form. Furthermore, this study also has potential implications for relevant countries which have similarities in legislative framework and government oversight.

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