Analysis of Book-Tax Difference’s Effect on Audit Fees: Corporate Governance as a Moderating Variable

Abstract

This study aims to examine the association between book-tax differences and audit fees in Indonesia. This study also examines the effect of corporate governance as a variable to moderate the association. The sample used is companies listed on the Indonesia Stock Exchange in 2012 until 2016, which consist of 309 observations. The results indicate that book-tax differences have no significant effect on audit fees. Corporate governance is also not proven to weaken the association. Interpretation of the results might imply that book-tax differences have not been seen by auditors as a risk factor in determining the audit fees, probably due to the low potential of earnings management from such differences.