## Earnings Management, Board Independence And Audit Fees Considering The Firm’s Profitability Level – Data Analysis

First hypothesis explains there is a meaningful relationship between earnings management and audit fees. As the result in table 5, H hypothesis is rejected by the 0.95 meaningful level (a>p-value, 0.05>0.00). On the other hand, there is a meaningful relationship between earnings management and audit fees. Also, there is a straight relationship between earnings management and audit fees coefficient. Beta unstandardized coefficient is 0.007 and shows that 0.007 of change in audit fees deviation is explained by change in earnings management.

Second hypothesis explains there is a meaningful relationship between board independence and audit fees. As the result in table 5, H hypothesis is rejected by the 0.95 meaningful level (a > p-value, 0.05>0.00). On the other hand, there is a meaningful relationship between board independence and audit fees. Also, there is a reverse relationship between board independence and audit fees coefficient. Beta unstandardized coefficient is -0.441 and shows that 0.441 of change in audit fees deviation is explained by change in board independence.

Final hypothesis explains there is a meaningful difference between audit fees in different firms concerning the level of firms profitability. As the result in table 6, the leven statistic shows that the meaningful level is 0.062, so the variances are homogeneous. Also, the comparison of audit fees between groups and within groups in table 6 indicates that H hypothesis is rejected by the 0.95 meaningful level (a > p-value, 0.05>0.00). On the other hand, there is a meaningful difference between audit fees in different firms concerning the level of profitability.

Table 1 shows the results of stepwise static hypothesis test. The best regression model and independent variable that use in regression model can be determined by this test. The results show that five variables- company size, type of auditor, earnings management, board independence and Listing age- are effective factors on audit fees that can enter to the model. itat on

The results in table 2 explain the cause of expel the remark, leverage, current ratio, return on assets and loss variables. In Remarks case with due attention to the “t” parameter

0.671 and significant level of 0.503, the beta coefficient for this variable is not meaningful. Thus, it removes from the model.

Table 3 shows the correlation after removing the variables that has increased. R Square is 0.323 and shows that 0.323 of change in audit fees, is explained by change in independent variables (earnings management and board independence). Durbin Watson parameter is 1.753 which shows the model works better with five remaining variables.

The results of table 4 are about the test of meaningfulness of all independent variable coefficients. Results show that variable coefficients are meaningful on the level of confidence 0.99, before and after removing variables.

**Table-1:Variables Entered**

Model | Variables Entered | Method |

1 | SIZE | Stepwise |

2 | AUD | Stepwise |

3 | ACA | Stepwise |

4 | BODIND | Stepwise |

5 | LISTAGE | Stepwise |

**Table-2:Excluded Variables**

Model | Beta In | t | Sig. | PartialCorrelation | Collinearity Statistics | |||

Tolerance | VIF | MinimumTolerance | ||||||

4 | REM | 0.029^{a} |
0.671 | 0.503 | 0.034 | 0.914 | 1.094 | 0.791 |

LEV | -0.046^{a} |
-1.092 | 0.275 | -0.055 | 0.985 | 1.015 | 0.792 | |

CUR | 0.028^{a} |
0.644 | 0.520 | 0.032 | 0.895 | 1.118 | 0.787 | |

ROA | -0.035^{a} |
-0.801 | 0.424 | -0.040 | 0.912 | 1.096 | 0.757 | |

LOSS | 0.022^{a} |
0.502 | 0.616 | 0.025 | 0.883 | 1.132 | 0.771 |

**Table-3:Model Summery**

Model | R | R Square | Adjusted R Square | Std. Error of the Estimate | Durbin-Watson |

4 | 0.568^{a} |
0.323 | 0.314 | 0.553 | 1.753 |

**Table-4: ANOVA**

Model | Sum of Squares | df | MeanSquare | F | Sig. | |

4 | Regression | 57.425 | 5 | 11.485 | 37.491 | 0.000 |

Residual | 120.392 | 393 | 0.306 | |||

Total | 177.817 | 398 |

**Table-5: Coefficients**

Model | UnstandardizedCoefficients | StandardizedCoefficients | t | Sig. | CollinearityStatistics | |||

B | Std. Error | Beta | Tolerance | VIF | ||||

4 | (Constant) | 3.473 | 0.333 | 10.430 | 0.000 | |||

SIZE | 0.180 | 0.025 | 0.333 | 7.147 | 0.000 | 0.895 | 1.158 | |

AUD | 0.347 | 0.059 | 0.255 | 5.831 | 0.000 | 0.903 | 1.107 | |

ACA | 0.007 | 0.002 | 0.170 | 3.639 | 0.000 | 0.892 | 1.163 | |

BODIND | -0.441 | 0.140 | -0.136 | -3.154 | 0.002 | 0.929 | 1.077 | |

LISTAGE | 0.009 | 0.004 | 0.101 | 2.357 | 0.019 | 0.930 | 1.075 |

**Table-6:Descriptive statistics of audit fees**

Groups | N | Mean | Std.Deviation | Std.Error | 95% Confidence interval for mean | |

Lowerbound | Upperbound | |||||

Low profitability | 100 | 5.31 | 0.5970 | 0.060 | 5.19 | 5.43 |

Middle profitability | 199 | 5.53 | 0.6150 | 0.044 | 5.44 | 5.61 |

Up profitability | 100 | 5.87 | 0.720 | 0.072 | 5.73 | 6.02 |

Total | 399 | 5.56 | 0.668 | 0.033 | 5.49 | 5.62 |