Last modified: 2017-06-30
Abstract
This study aims to investigate the influence of alignment effect and entrenchment effect of family ownership and internal control effectiveness on audit fee. This study use generalized least square (GLS) regression method. The result of this study indicates that companies actually will pay significant lower audit fees because of alignment effect between controlling shareholders and company interest. This study also shows that a company which has separation of ownership and control will choose low-quality auditors to hide their expropriation. Besides that, this study also indicates that lower control risk in a company will turn to lower audit fees. This study implies the importance of audit fee disclosure which reflect inherent risk from alignment and entrenchment effect and also reflect control risk from internal control ineffectiveness.