Ownership Structures, Board Independence and Auditor’s Remuneration: Evidence from India

Abstract

Prior research on auditor’s remuneration has shown mixed evidence on the association between ownership structures and auditor’s remuneration. Previous studies have also documented relationship between board independence and audit fee. However, there is dearth of studies on these aspects in context of India which is dominated by family owned business groups and has seen significant changes in corporate governance norms in last decade. The present study examines the association of promoter’s ownership, institutional ownership and board independence together with auditor’s remuneration. The study takes a sample of 96 firm years. The results of the study suggest that there is a positive and significant association of promoter’s ownership and institutional ownership with auditor’s remuneration. However, there is no conclusive evidence on the relationship between board independence and auditor’s remuneration. The results are consistent to various robustness tests.

Keywords: Ownership structure, Promoter’s shareholding, Institutional shareholding, Board independence, Audit fee, Auditor’s remuneration