Relationship between managerial ownership, audit firm size, and audit fees

The purpose of this study is to investigate the relationship between managerial ownership and the size of the audit firm and the audit fee. In order to test the research hypotheses, linear regression has been used for manufacturing companies listed on the Tehran Stock Exchange between 2013 and 2018. In this study, the size of the audit firm (audit quality) and the audit firm fee (audit risk) are considered as dependent variables and managerial ownership as an independent variable. Based on the systematic elimination method, 131 companies were selected as the statistical sample of this study. The results show that in companies where the interests of managerial ownership are located in the convergence zone (at the level of 5 to 20%) with increasing managerial ownership, the quality of auditing decreases. In companies where managerial ownership interests are located in the entrenchment zone (less than 5% or more than 20%), there is no significant relationship between managerial ownership and audit quality. In companies where the interests of managerial ownership are located in the convergence zone (at the level of 5 to 20%), with increasing management ownership, the audit risk decreases. In companies with managerial ownership interests located in a entrenchment area (less than 5%), audit risk decreases as management ownership increases. In companies where the interests of managerial ownership are located in the entrenchment zone (more than 20%), with increasing managerial ownership, the audit risk increases. Findings show that the extent of managerial ownership benefits in a company can affect management motivations for the type and quality of accounting. This can affect companies 'desire for higher quality audits and auditors' assessment of customer risk.