Since Simunic(1980), a large body of research has examined the determinants of audit fees over the past 30 years. Most prior research following Simunic(1980) has explored a supply view of audit fee which assumes that higher audit risk is associated with more audit work and higher audit fees. However, since audit fees had been regulated by 1999 in Korea, there are not many studies which examine the determinants of audit fees. Based on both the audit risk model and prior research, this paper systematically identifies audit risk factors which may have an effect on audit fees and examines the relation between audit risk factors (inherent risk, control risk, and detection risk) and audit fees. According to the audit risk model, auditors decide the level of tolerable detection risk, based on targeted audit risk and the evaluation of the inherent and control risk of the auditee firms. If targeted audit risk is assumed to be constant, acceptable detection risk is inversely related to both inherent and control risk. Lower level of tolerable detection risk demands more audit hours to achieve the targeted audit risk which lead to higher audit fees from the auditor’s perspective. In this paper, the inherent risk factors include operation complexity and financial status of the auditee firms and the control risk factors include characteristics of both managements and board of directors. In this paper, it is hypothesized that higher inherent risk factors is associated with higher audit fees. We also hypothesize that characteristics of management such as managers’ ownership percentage, the existence of managers’ stock option compensation plan, and whether managers belong to the business group called “Chaebol” in Korea, have a significant positive effect on audit fees. Lastly, we hypothesize that characteristics of board of directors are significantly associated with audit fees. We don’t predict whether the risk factors are positively or negatively associated with audit fees. The supply viewpoint of auditing services may predict that more effective boards means lower control risk which leads to lower audit fees. However, the demand viewpoint of auditing services may demand higher quality of auditing service in order to effectively monitor management’s financial reporting process, which may lead to higher audit fees. This paper uses 2,724 firm-year data of the manufacturing firms listed on the Korean Stock Exchange from 2000 to 2006. Our specific regression model is as follows: LN(FEE) = α + β1 LN(ASSETS) + β2 RECEIV + β3 INV + β4 FORSALES + β5 DEBT+ β6 ROA + β7 LOSS + β8 MANOWN + β9 STOCKOP + β10CHAEBOL + β11OUTDIR + β12 OUTTEN + β13 SUBCOM + β14 BODMEET + β15 BODACT + β16 AC + β17 BIG + β18 AUDITTEN + β19NONATFEE +   βi IND +   βt YEAR + ε LN(FEE) : the natural log of audit fees ; LN(ASSETS) : the natural log of total assets ;RECEIV : receivables / total assets ; INV : inventories / total assets ; FORSALES : foreign sales / total sales ; DEBT : total debt / total assets ; ROA : return on total assets ; LOSS :dummy variable indicating whether the firm had prior 3 consecutive year losses ; MANOWN :management’s ownership percentage ; STOCKOP : dummy variable indicating existence of stock option plan given to management ; CHAEBOL : dummy variable indicating whether managers belong to the business group called “Chaebol” ; OUTDIR : ratio of outside directors on the board ; OUTTEN : outside directors’ tenure ; SUBCOM: number of subcommittee on the board ;BODMEET: number of board meetings ; BODACT : ratio of outside directors attending board meetings ; AC : dummy variable indicating whether audit committee exists ; BIG :dummy variable indicating whether auditors are Big or not ; AUDITTEN : auditor’s tenure ;NONATFEE : dummy variable indicating existence of non-audit fees ; IND : variables indicating the industry the firm belongs to ; YEAR : variable indicating the year each observation belongs to. Based on the above regression model, Our main findings are as follows. First, our results show that among managers’ characteristics considered, managers' ownership percentage, the existence of managers’ stock option compensation plan, and whether managers belong to Chaebol have positive associations with audit fees. As managers’ ownership percentage increases, the owner-manager may have incentives to manage earnings, which may increase control risk and thus increase audit fees. When there exists manager’s stock option compensation plan, the manager may have incentives to manipulate short-term earnings to maximize his own profits. This opportunistic financial reporting behavior of the manager may lead to increase in control risk and audit fees. It is difficult for managers belonging to Chaebol to criticize majority owners’ opportunistic reporting behaviors, which may lead to increase in both control risk and audit fees. Secondly, this paper finds that among board characteristics considered, percentage of outside directors on board of directors, outside directors’ tenure, the number of subcommittees on the board, and the frequency of directors’ meeting are positively associated with audit fees. To protect its reputation and avoid legal liability, a more independent, expert, and diligent board may demand higher audit quality. That is, consistent with foreign prior studies, the demand side effect of higher audit quality may dominate the supply side effect based on the audit risk model, which predicts a negative relation between effectiveness of board of directors and audit fees. Thirdly, consistent with prior results, we find significant positive relations between audit fees and inherent risk factors such as total assets, receivables-to-total assets ratio, and loss dummy variable and significant negative associations between audit fees and inherent risk factors such as return on assets and debt-to-total assets ratio. We also find that the characteristics of the auditors such as Big auditor variable, auditor tenure and the existence of non-audit fees are positively associated with audit fees. Our results add to the growing body of literature documenting association between management and corporate governance characteristics and audit fees, as well as to our systematic understanding of the determinants of audit fees. Our results can be used as a guide line in negotiating audit fees between auditors and clients, and can help the regulation body to control improper audit fee discounts in the audit service industry.