Audit Committee Characteristics and Audit Fee: Evidence from Tehran Stock Exchange

Audit committee, as one of the main mechanisms of corporate governance, is obliged to examine the initial auditing program and interaction with external auditors in the process of financial reporting. Thus, it is likely to be influential on the auditing scope, auditor’s effort, and audit fee. This research is aimed to explore the effects of audit committee characteristics (including financial expertise, independence, and size) on audit fees. To do this, the data related to the firms listed in Tehran Stock Exchange is extracted for a period from 2012 to 2014. The research hypotheses are analyzed using regression model of compositional data. The results show that audit committee financial expertise and independence has a positive and significant relation with audit fees. Yet, there was no significant relationship between audit committee size and audit fees. Further, regarding the control variables used in this research, the results show a positive and significant relation of financial leverage, ratio of accounts receivable and inventory, audit firm size and Board of Directors meeting frequency with audit fees.