Can Substitution and Signaling Theories Explain the Relationship between External Audit Fees and the Effectiveness of Internal Corporate Governance?
Keywords:
substitution theory, signaling theory, internal governance, audit fees
Abstract
The aim of this study is to investigate the relationship between external audit fees and the effectiveness of internal corporate governance of non-financial companies listed on Abu Dhabi Securities Exchange (ADX) by testing substitution and signaling theories. To reachthis aim, data were collected from the annual reports of all non-financial companies listed on the exchange for the year 2012. The result of the analysis showed partial support to substitution theory. Effective internal audit employed by nonfinancial Emirati companies listed on ADX appeared to be negatively related to external audit fees. The relations was, however, marginally significant.
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2013-10-04
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