Social Capital, Intellectual Capital, and Audit Fee: Conflicting Evidence from Iran

In the current study, we investigate impacts of social capital (SC) and intellectual (IC) on audit fees among companies listed Tehran Stock Exchange (TSE). Since criteria for norms networks are extremely correlated, used a principal component analysis (PCA) to construct an index each province between 2011 2016. The Pulic model is also as proxy measuring value added (VAIC). ordinary least squares (OLS) regression employed in this study test our research hypotheses well. According literature, one hand, investors lenders can be more confident financial reporting honesty firms headquartered areas with high capital; other auditors judge trustworthiness their clients based where firm headquartered. Inconsistent prior studies, findings show that provinces pay higher fees. Given Iranian under heavy pressure due economic sanctions, those located likely have abused level trust groups market them participated earnings manipulation mask weak performance. Among various components IC, found strong evidence efficiency (ECE) costs correlated positively. short, paper sheds light fact severe pressures managers may sometimes lead take advantage dark side when preparing reports.