Corporate political activism and audit fees: evidence from initial public offerings

Dimitrios Gounopoulos, Panagiotis Loukopoulos, Georgios Loukopoulos

Research output: Contribution to conferencePaper

Abstract

This study examines the association between corporate political strategies and audit fees. Consistent with agency theory, we find that political money contributions (PMC) are positively related to audit fees. Economically, our findings also suggest that, firms with active political strategies are associated with a 23% increase on audit charges, which, in turn, translates to $200,000 higher audit fees. We also demonstrate that the positive association between PMC and audit fees is weakened among firms with high corporate governance quality, whereas this link reinforced among firms with high financial reporting quality. Moreover, our findings indicate that the relationship between active political strategies and audit charges is less pronounced in firms with high ability managers and more pronounced in uncertain environments.

Conference

ConferenceEuropean Accounting Association
Abbreviated titleEAA 2019
CountryCyprus
CityPaphos
Period29/05/1931/05/19
Internet address

Fingerprint

Audit fees
Initial public offerings
Activism
Political strategy
Audit
Charge
Financial reporting quality
Corporate political strategy
Corporate governance
Managers
Agency theory

Keywords

  • initial public offerings
  • audit fees
  • political money contributions
  • audit risk
  • audit pricing

Cite this

Gounopoulos, D., Loukopoulos, P., & Loukopoulos, G. (2019). Corporate political activism and audit fees: evidence from initial public offerings. Paper presented at European Accounting Association, Paphos, Cyprus.
Gounopoulos, Dimitrios ; Loukopoulos, Panagiotis ; Loukopoulos, Georgios. / Corporate political activism and audit fees : evidence from initial public offerings. Paper presented at European Accounting Association, Paphos, Cyprus.41 p.
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Gounopoulos, D, Loukopoulos, P & Loukopoulos, G 2019, 'Corporate political activism and audit fees: evidence from initial public offerings' Paper presented at European Accounting Association, Paphos, Cyprus, 29/05/19 - 31/05/19, .

Corporate political activism and audit fees : evidence from initial public offerings. / Gounopoulos, Dimitrios; Loukopoulos, Panagiotis; Loukopoulos, Georgios.

2019. Paper presented at European Accounting Association, Paphos, Cyprus.

Research output: Contribution to conferencePaper

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AU - Loukopoulos, Panagiotis

AU - Loukopoulos, Georgios

PY - 2019/5/30

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AB - This study examines the association between corporate political strategies and audit fees. Consistent with agency theory, we find that political money contributions (PMC) are positively related to audit fees. Economically, our findings also suggest that, firms with active political strategies are associated with a 23% increase on audit charges, which, in turn, translates to $200,000 higher audit fees. We also demonstrate that the positive association between PMC and audit fees is weakened among firms with high corporate governance quality, whereas this link reinforced among firms with high financial reporting quality. Moreover, our findings indicate that the relationship between active political strategies and audit charges is less pronounced in firms with high ability managers and more pronounced in uncertain environments.

KW - initial public offerings

KW - audit fees

KW - political money contributions

KW - audit risk

KW - audit pricing

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Gounopoulos D, Loukopoulos P, Loukopoulos G. Corporate political activism and audit fees: evidence from initial public offerings. 2019. Paper presented at European Accounting Association, Paphos, Cyprus.