The relationship between internal governance characteristics and audit fees: why regulatory oversight is important

Abstract

Thie paper studied the relationship between internal audit, external audit  and regulatory oversight for a cluster of  industrial companies and financial/utility companies.The results showed that the relationship between audit fees and board/audit committee independence and size are less important for the regulated companies. These observations can be used as evidence that  the regulatory oversight partially substitutes the external audit as a monitoring mechanism. The study enhances our understanding of the complex relationships among the major corporate governance elements.