Do Family Firms Pay More Attention to Audit Fees and Audit Choices than Non-Family Firms?

PurposeThe main aim of this paper is to examine auditor choice and audit fees in family firms on the Tehran Stock Exchange.Design/methodology/approachThe hypotheses set are tested by analysing all firms except financial firms listed on the Tehran Stock Exchange for the period of 10 years, using a sample of 1,050 firm-year observations. Probity and ordinary least squares regression (OLS) is used to investigate the associations proposed in the research hypotheses.FindingOur findings show that in family firms, in contrast with non-family firms, the large auditor is less often selected as the firm’s auditor. The findings also show that family firms pay higher fees for their audits in comparison with non-family firms and show that the choice of a large auditor reduces the relationship between family ownership and audit fee. The additional analysis shows that choosing industry specialist auditors is less likely in family firms compared to non-family firms.Practical implicationsThe importance of this research is in the increased awareness for researchers and users about family ownership and the selection of auditors and audit fees in the emerging market capitalization of Iran. This research contributes to the accounting literature by providing empirical evidence of the effects of family control and ownership on audit pricing and auditor choice in a developing economy context. Also, this research can provide a new route for research on this issue in developing countries, e.g., Iran.Originality/valueThese findings were discovered by means of the financial data in the particular environmental conditions of Iran which differ from the features and conditions for institutional investors in developed countries