Investigating the effect of the same tenure of CEO and CFO on the audit fees

Articles in Press

Document Type : Research Paper

Authors

1 Assistant Professor of Accounting, Faculty of Management and Accounting, Shahid Beheshti University, Tehran, Iran.

2 Department of accounting, faculty of Management And Accounting, Allameh Tabataba’I University, Tehran, Iran

10.22103/jak.2025.24123.4103

Abstract

Objective: The relationship between the CEO and CFO of the firm is one of the important aspects of the firm's management team, and this research has investigated the effect of the same tenure of the CEO and CFO of the firm on the audit fee.

Methods: This study is an applied research that examines the relationships between target variables by a descriptive and causal approach. The hypotheses of this research were tested by a sample of 84 companies in Tehran Stock Exchange during 2016 to 2021 and use of panel data (with controlling year and industry fixed effects) and multivariable regression model. To measure the audit fee, the natural logarithm of the firm's audit fee was used. Consistency of the tenure was measured by two criteria (starting the tenure at the same time and appointing a CFO by the current CEO).

Results: The results show that the same tenure of the CEO and CFO of the company, as well as the appointment of the CFO by the current CEO, is associated with an increase in audit fees, which indicates an increase in audit risk. However, the effect of tenure consistency on audit fees was not confirmed through the mediating variable of earnings quality.

Conclusion: The findings of the research show that the consistency of the tenure of the CEO and CFO increases the audit risk. But this increase is not from a decrease in earnings quality and can be resulted from other aspects of risk about fraud or corporate governance.

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Main Subjects

Journal of Accounting Knowledge

Articles in Press, Accepted Manuscript
Available Online from 08 April 2025

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History

  • Receive Date: 05 October 2024
  • Revise Date: 15 January 2025
  • Accept Date: 08 April 2025

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