Impact of Ultimate Ownership Type on Audit Fees with Corporate Governance as Moderating Variable

This study examines the impact of ultimate ownership type on audit fee and corporate governance role as moderating variable, using banking companies data from 2012–2016. Results show that ultimate family ownership had no significance impact to audit fees due to alignment effect and entrenchment effect. However, institutional ownership had a significant positive effect on audit fees because institutional investors demand high quality external audits as a form of investor protection. Government ownership has a significant negative effect on audit fees only with moderating variables because government ownership increases the company’s control (alignment effect) and reduces its risk. This study also found that the role of the board of commissioners and the audit committee did not moderate the effect of ownership on audit fees. Keywords— audit fee, ultimate ownership, corporate governance