The relationship between audit fees and audit committee characteristics: evidence from the Athens Stock Exchange

Abstract

Strengthening the audit committee is an increasingly important element in the agenda of academics, practitioners and policy-makers in their effort to improve the quality of financial information and to promote audit quality. In this research, we examine the relationship between audit committee characteristics and audit and non-audit fees paid to auditors throughout the first year of the implementation of Law 4449/2017 in Greece. Using a sample of 126 listed companies on the Athens Stock Exchange, we show that audit committee characteristics (i.e. AC size, frequency of meetings and the presence of at least one member with previous experience in a similar position) have a positive relationship with audit fees. Moreover, we find that board size is positively associated with audit fees, which means that the assignment of new roles to audit committees has not been realized to its full potential as recent Law 4449/2017 highlights. Finally, we present evidence that audit committees with a high percentage of members with previous experience in audit committees may be less willing to allow a disproportionate provision of non-audit services in relation to total fees. On that basis, our study offers insights to Greek legislators, auditors, boards and corporate governance scholars. © 2020, Springer Nature Limited.