Aspects of board diversity and audit fees: evidence from an emerging economy

This study examines the impact of board diversity by gender and nationality on audit fees. It also assesses how board diversity moderates the relationship between corporate financial risk and audit fees in the context of recent governance changes in Egypt, as a developing country. Using a sample of 360 firm-year observations of non-financial firms listed on the EGX100 from 2014 to 2019, we conduct univariate and multivariate analyses to examine the impact of board diversity on audit fees after controlling for firm and audit committee characteristics. Our results indicate a significant positive effect of corporate boards’ gender and national diversity on audit fees. We also find that board diversity moderates the relationship between financial risk and audit fees, highlighting its pivotal role in corporate governance. To our knowledge, none of the previous studies examined the moderating role of board diversity concerning the relationship between financial risk and audit fees. Unlike prior studies, we also explore how board diversity influences financial risk implications for audit fees, potentially offering more insights than those derived from audit committee diversity alone.