Determination of Audit Fee: Analysis of Audit Quality, Company Characteristics, and Ownership Structure

This study uses quantitative methodology to examine the factors that influence audit fees in companies listed on the LQ45 index from 2019 to 2023. The independent factors studied were audit quality, company size, company complexity, company risk, managerial ownership, and institutional ownership. Data collection was carried out by purposive sampling, resulting in 115 observations from 32 companies over a five-year period. This study uses two estimation models, namely Ordinary Least Squares (OLS) and OLS with robust standard errors, to test the reliability of the results and minimise potential heteroscedasticity. The research findings show that audit quality, business complexity, firm risk, and institutional ownership have a positive and significant effect on audit fees. This suggests that auditors set higher fees for companies with high levels of operational risk and complexity, as well as the influence of strong institutional ownership, due to the high need for oversight and assurance of the independence of financial statements. On the other hand, firm size and managerial ownership do not have a significant effect on audit fees, which suggests that these factors are not always the main determinants in determining audit fees. This finding supports agency theory, which emphasises that audit fees reflect a mechanism to mitigate conflicts of interest between shareholders and management. Thus, audit fees act as a form of control and protection against the risk of asymmetric information. This research provides insights for companies and auditors to develop effective audit fee management strategies and strengthen accountable and transparent corporate governance.