search query: @journal_id 1585 / total: 74
reference: 15 / 74
| Author: | Gul, F. A. Tsui, J. S. L. |
| Title: | Free Cash Flow, Debt Monitoring, and Audit Pricing: Further Role of Director Equity Ownership |
| Journal: | Auditing: A Journal of Practice and Theory
2001 : SEP, VOL. 20:2, p. 71-84 |
| Index terms: | CASH FLOW DEBT AUDITING |
| Language: | eng |
| Abstract: | Agency theory suggests that there is a conflict of interest between managers and shareholders in firms with low management ownership; this occurs because the interests of the managers and the shareholders may not be closely aligned. Two factors are likely to mitigate the agency costs of FCF. First, high debt firms have a higher level of debt monitoring that the authors expect to reduce the agency problems of FCF. Second, the authors expect firms with high management ownership to reduce the agency costs of FCF. The authors tested the theory by linking these expectations to audit fees charged by Big á ÑÐÀ firms of 140 Australian firms. The authors expect low growth firms with high FCF to be associated with higher inherent risk and therefore higher audit effort and resulting audit fees. |
SCIMA