Background: Limited research has been conducted in the field of auditing within family firms. A possible explanation is that the demand for auditing research is commonly relying on agency theory to depict the firms’ choice of quality auditing, and in family firms these agency costs are less frequent. Accordingly, limited attention has been allocated in examining agency conflicts and its effects on audit fees within the family firms.

Purpose: The purpose of this thesis is to investigate whether family members on the board of directors may affect the audit fees within family firms in Sweden. More specifically, whether the number of family members will decrease agency costs that in the end decrease the audit fees. Also, the thesis investigates whether the total number of board members will increase the audit fees.

Method: The thesis performs a quantitative research approach investigating a sample of 152 family firms in Sweden. Primary data is collected through a survey method which provides information from the family firms about audit fees, board members and their perceptions of the auditor in the firm. Secondary data is obtained through Retriever Business, directly from the family firm respondents’ financial statement. For the analysis of the data, a linear multiple regression and two Pearson correlations are used.

Conclusion: The results show that the higher the number of family members present on the board of directors in Swedish family firms, the lower the audit fees will be. It further shows that there is also a relationship between the number of total board members and the audit fees. Thus, the findings show that family members present on the board of directors decreases the audit fees whilst the size of the board increases it. Moreover, the thesis finds that the discussed characteristics of the boards show signs of increased agency conflicts which can explain the increase in audit fees.