Seminario di Cédric Lesage

Sala Seminari – I° piano, Palazzo Levi Cases, Via del Santo 33 ore 12.30

29.06.2016

Seminario di Cédric Lesage, HEC Paris

Blockholders’ ownership and audit fees: the impact of the corporate governance model

This paper examines how two prominent corporate governance models, namely the shareholder and stakeholder models (Ball et al., 2000), have different effects on the relation between agency conflicts (proxied by blockholder ownership) and the demand and supply of audit services (proxied by audit fees). Shareholder (stakeholder) countries rely heavily on public (private) information to reduce information asymmetry for outside investors in the context of high (low) litigation risk. Hence we expect audit fees to reflect the level of agency conflicts in shareholder countries as well as the needs of the major blockholders in stakeholder countries. Based on multivariate regression analyses of companies from 19 countries, our results show: (1) a u-shaped (convex) relation between controlling shareholding and audit fees for shareholder countries; and (2) an inverted u-shaped (concave) relation between controlling shareholding and audit fees for stakeholder countries. Additional analyses provide insights on the influence of leverage and family ownership. Our findings help disentangle previous ambiguous results (Hay et al., 2006) on the relation between ownership and audit fees while also providing new insights on audit firms’ incentives.