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de Villiers, Charl, David Hay und Zhizi (Janice) Zhang. „Audit fee stickiness“. Managerial Auditing Journal 29, Nr. 1 (20.12.2013): 2–26. http://dx.doi.org/10.1108/maj-08-2013-0915.
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Purpose – This study aims to contribute to the understanding of audit pricing and the competitiveness of the audit fee market by examining audit fee stickiness. Design/methodology/approach – The authors explore the price behavior of audit fees in response to changes in the variables that are usually seen as their determinants, such as size, complexity, and risk in order to examine audit fee stickiness and the competitiveness of the market for audit services. Findings – The authors find that audit fees are sticky, i.e. audit fees do not immediately or fully adjust to changes in their determinants. Audit fees also respond to changes leading to an increase more quickly than they respond to changes leading to a decrease. The difference between positive and negative fee adjustments declines over periods longer than one year and is no longer significant when four-year periods are considered. Research limitations/implications – The study is limited to companies in the USA from 2000 to 2008. Future research should examine this issue in other settings and periods. Practical implications – The results suggest that the audit market is competitive, at least in the medium term. Originality/value – The study helps to explain why the audit fee model does not fully explain the level of audit fees; why audit fees are more likely to be too high than too low; and why auditor switches are commonly associated with larger changes in audit fees. The findings provide evidence that may be useful to managers and audit committees when managing their audit fees, auditors when considering the risks and opportunities associated with changes in the determinants of audit fees, and regulators concerned with the competitiveness of the audit market.
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Holm, Claus, und Frank Thinggaard. „Leaving a joint audit system: conditional fee reductions“. Managerial Auditing Journal 29, Nr. 2 (03.02.2014): 131–52. http://dx.doi.org/10.1108/maj-05-2013-0862.
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Purpose – The authors aim to exploit a natural experiment in which voluntary replace mandatory joint audits for Danish listed companies and analyse audit fee implications of using one or two audit firms. Design/methodology/approach – Regression analysis is used. The authors apply both a core audit fee determinants model and an audit fee change model and include interaction terms. Findings – The authors find short-term fee reductions in companies switching to single audits, but only where the former joint audit contained a dominant auditor. The authors argue that in this situation bargaining power is more with the auditors than in an equally shared joint audit, and that the auditors' incentives to offer an initial fee discount are bigger. Research limitations/implications – The number of observations is constrained by the small Danish capital market. Future research could take a more qualitative research approach, to examine whether the use of a single audit firm rather than two has an effect on audit quality. The area calls for further theory development covering audit fee and audit quality in joint audit settings. Practical implications – Companies should consider their relationship with their auditors before deciding to switch to single auditors. Fee discounts do not seem to reflect long-lasting efficiency gains on the part of the audit firm. Originality/value – Denmark is the first country to leave a mandatory joint audit system, so this is the first time that it is possible to study fee effects related to this.
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Porter, Christine M. „Bank Audit Fee Pressure During the Financial Crisis“. Current Issues in Auditing 14, Nr. 1 (22.10.2019): A31—A45. http://dx.doi.org/10.2308/ciia-52643.
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SUMMARY This study examines the pressure on bank audit fees during the height of the financial crisis. I employ a prior year benchmark audit fee method and compare it to the actual audit fee to determine the amount of fee pressure applied in a year. Results show a significant amount of fee pressure exerted upon bank auditors during 2008, more so than that found in studies of other industries. This study also investigates a bank specific fee model during the crisis finding differences in determinants of fees for those banks that did apply fee pressure. JEL Classifications: M42.
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Kim, Jeong-Bon, Xiaohong Liu und Liu Zheng. „The Impact of Mandatory IFRS Adoption on Audit Fees: Theory and Evidence“. Accounting Review 87, Nr. 6 (01.06.2012): 2061–94. http://dx.doi.org/10.2308/accr-50223.
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ABSTRACT: This study examines the impact of International Financial Reporting Standards (IFRS) adoption on audit fees. We first build an analytical audit fee model to analyze the impact on audit fees for the change in both audit complexity and financial reporting quality brought about by IFRS adoption. We then test the model's predictions using audit fee data from European Union countries that mandated IFRS adoption in 2005. We find that mandatory IFRS adoption has led to an increase in audit fees. We also find that the IFRS-related audit fee premium increases with the increase in audit complexity brought about by IFRS adoption, and decreases with the improvement in financial reporting quality arising from IFRS adoption. Finally, we find some evidence that the IFRS-related audit fee premium is lower in countries with stronger legal regimes. Our results are robust to a variety of sensitivity checks. Data availability: Data are available from public sources identified in the paper.
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Houston, Richard W., Michael F. Peters und Jamie H. Pratt. „The Audit Risk Model, Business Risk and Audit-Planning Decisions“. Accounting Review 74, Nr. 3 (01.07.1999): 281–98. http://dx.doi.org/10.2308/accr.1999.74.3.281.
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This study identifies conditions under which the audit risk model does, and does not, describe audit-planning (investment and pricing) decisions. In an experiment, audit partners and managers examined one of two cases where a material misstatement—error or irregularity—was discovered. The auditors assessed the elements of the audit risk model, assessed business risk and provided recommendations for the audit investment and fee. When the likelihood of an error was high, the audit risk model dominated business risk in the explanation of the audit investment, and the fee did not contain a risk premium. When the likelihood of an irregularity was high, business risk dominated the audit risk model in the explanation of the audit investment, and the fee contained a risk premium. These results suggest that the ability of the audit risk model to describe auditor behavior and the inclination of auditors to charge a risk premium depend upon the nature of the risks present in the audit. In the presence of errors, the audit risk model adequately described audit-planning decisions; in the presence of irregularities it did not.
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Chung, Hoon, und Hye－Won Paik. „Does Abnormal Audit Fee Mean Compensation for Audit Costs? : Examining the Abnormal Audit Fee Using Cost Asymmetry Model“. Review of Accounting and Policy Studies 24, Nr. 3 (31.08.2019): 107–35. http://dx.doi.org/10.21737/raps.2019.08.24.3.107.
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Dey, R. Mithu, und Lucy Lim. „Audit fee trends from 2000 to 2014“. American Journal of Business 33, Nr. 1/2 (03.04.2018): 61–80. http://dx.doi.org/10.1108/ajb-10-2016-0033.
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Purpose Setting audit fees is a persistent source of stress for auditors who must, on one hand, comply with the increasing government regulations that generally cause costs to rise; and on the other hand, respond to client pressures to keep audit fees down. In the post-scandal environment of Enron, WorldCom, and the demise of Arthur Andersen, policy makers have introduced additional costs for auditors by increasing regulations and creating a new industry watchdog – the Public Company Accounting Oversight Board (PCAOB). In this environment of constant pricing-cost tension for the auditor, the purpose of this paper is to examine audit fee trends over an extended period, 2000-2014. Design/methodology/approach The authors calculate the unexpected audit fees using the audit fee model. The authors examine audit fee trends while controlling for changes due to inflation, auditor wages, and other audit fee determinants. Findings The key findings indicate that audit fees increased in response to the promulgation of new audit regulations requiring additional audit work, the Sarbanes-Oxley (SOX) Act of 2002 and Auditing Standard No. 2 in 2004. Additionally, the authors find that audit fees decreased after new regulations alleviating audit work, namely the passage of Auditing Standard No. 5 in 2007, and remained unchanged when new regulations had a minimal impact on audit work, namely the Dodd-Frank Act of 2010. Practical implications The findings of this research are relevant to audit clients, auditors, and regulators as they weigh the cost and benefits of significant new audit regulations and their impacts on audit fees. Originality/value Using the more recent US data, the results in this paper show how events changed audit fee trends in recent years. The findings indicate that audit fees increased after the passage of new audit regulations such as the SOX Act of 2002, Auditing Standards No. 2 in 2004, and decreased after the passage of Auditing Standards No. 5 in 2007.
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Kristiyani, Dian. „Transaksi Pihak Terkait atas Biaya Audit: Peran Efektivitas Komite Audit“. E-Jurnal Akuntansi 30, Nr. 10 (27.10.2020): 2619. http://dx.doi.org/10.24843/eja.2020.v30.i10.p14.
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The purpose of this study is to analyze the effect of related party transaction and the effectiveness of audit committee on audit fee. This research uses samples a manufacturing company in Indonesia Stock Exchange (IDX) in 2014-2018. The sampling technique used purposive sampling. The total number of companies used as research samples is 118 companies. Using tools SPSS 20 and testing hypothesis using linear regression. The F test indicates a stable and significant model. R square is 58,7 percent. The results show that related party transactions have a significant positive effect and the effectiveness of the audit committee has a significant negative effect on audit fees.
Keywords: Related Party Transaction; Effectiveness Of Audit Committee; Audit Fee.
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Taylor, Stuart D. „Does Audit Fee Homogeneity Exist? Premiums and Discounts Attributable to Individual Partners“. AUDITING: A Journal of Practice & Theory 30, Nr. 4 (01.11.2011): 249–72. http://dx.doi.org/10.2308/ajpt-10113.
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SUMMARY This paper investigates the implied assumption, made in many audit fee determination studies, that, within a given audit firm, all partners produce a statistically identical level of audit quality and earn a statistically identical level of audit fees. This is referred to as the “homogeneity assumption.” However, this is contradicted by the individual auditor behavioral literature, which shows that different individual auditor characteristics can have an impact on audit quality. Given the fact that audit partners differ in their quality, this paper hypothesizes that different audit partners will be able to earn differing levels of fees. This hypothesis is tested by estimating an audit fee model using data from 822 Australian publicly listed companies for the year 2005. Australia is an ideal audit market for this research, as the disclosure of the name of the audit engagement partner in the audit report is mandatory. The empirical results indicate that individual audit partners earn individual audit fee premiums (or discounts) that are not explainable by the audit firms of which they are members. Data Availability: All data have been extracted from publicly available sources.
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Cairney, Timothy D., und Errol G. Stewart. „Audit Fees and Client Industry Homogeneity“. AUDITING: A Journal of Practice & Theory 34, Nr. 4 (01.01.2015): 33–57. http://dx.doi.org/10.2308/ajpt-51040.
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SUMMARY This study examines the relationship between a client industry's homogeneity and audit fees. We assume that audit efficiencies occur in audits in industries whose members have similar operations and, therefore, are where auditors benefit from the use of similar audit procedures and experience lower average audit costs. To identify industries with similar operations, we use operational expense homogeneity, which is based on the correlations between the changes in operating expenses among industry members. Adapting a standard fee model (Hay, Knechel, and Wong 2006), we find that homogeneity is negatively associated with audit fees. Further, we find that specialist auditors charge lower fees in homogenous industries. Finally, we observe a lower standard deviation of fees in more homogenous industries. Together, these results suggest that auditors sustain lower costs in audits of homogenous clients and that the similarly lower costs incurred across auditors are passed on to clients in the form of lower fees. Data Availability: Data used in this paper are available from the sources listed in the paper.
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Li, Yutao, und Yan Luo. „The contextual nature of the association between managerial ability and audit fees“. Review of Accounting and Finance 16, Nr. 1 (13.02.2017): 2–20. http://dx.doi.org/10.1108/raf-01-2016-0012.
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Purpose This study examines whether auditors’ pricing decisions on managerial ability are affected by auditor litigation risk (financial distress or financial crisis), auditor’s familiarity with their client or regulatory changes in the post-Sarbanes–Oxley Act of 2002 (SOX) era. Design/methodology/approach Building on the extant audit fee literature, this study constructs an audit fee determinants model to examine how context affects auditors’ pricing of managerial ability. Findings Auditors offer a larger fee discount to more able client management teams when auditors face lower litigation risks or are more familiar with the client. Furthermore, managerial ability has a more pronounced effect on audit fees in the post-SOX era when managers are mandated to play more active roles in financial reporting (i.e. certification of financial statements required by SOX 302). Research limitations/implications Based on the audit risk model (Simunic, 1980), Krishnan and Wang (2015) show that the managerial ability of an audit client is relevant and important to auditors’ pricing decisions. This study demonstrates that managerial ability exhibits a non-linear relationship with audit fees and contextual factors, such as litigation risk, and that auditors’ familiarity with managers can alter the negative association between audit fees and managerial ability. This study extends Krishnan and Wang’s study by offering additional insights into auditors’ use of soft information such as managerial ability. Furthermore, the findings add to the literature on the impact of SOX on audit fees by suggesting that SOX has not only increased overall audit fees (Ghosh and Pawlewicz, 2009; Huang et al., 2009), it has also increased auditors’ price sensitivity to soft information (e.g. managerial ability). Practical implications This study provides insights for audit firms and client companies who are interested in understanding audit fee-pricing decisions. The findings also suggest that auditors need to be sensitive and responsive to various contextual factors when making pricing decisions. Originality/value Previous studies have not addressed the non-linear relationship between audit fees and soft information about managerial ability.
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Pratoomsuwan, Thanyawee. „Audit prices and Big 4 fee premiums: further evidence from Thailand“. Journal of Accounting in Emerging Economies 7, Nr. 1 (06.02.2017): 2–15. http://dx.doi.org/10.1108/jaee-07-2014-0039.
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Purpose Because there is mixed evidence regarding Big N fee premiums across countries, the purpose of this paper is to re-examine the phenomenon of audit price differentiations in the market for auditing services in Thailand. Although Hay et al. (2006) and Hay (2013) reviewed over 80 audit fee papers from 20 countries over 25 years, 13 of which were based in emerging economies, the understanding of the market for auditing services in Thailand remains limited. Because the Thai auditing market is also classified as a segmented market – i.e., a market that is less competitive for large-client firms and more competitive for small-client firms – this study tests audit price competition in an emerging audit market using Thailand as an example. Design/methodology/approach The traditional audit fee model is used to estimate audit fee premiums for a sample of over 300 non-financial companies listed on the Stock Exchange of Thailand in 2011. Findings Although the market for auditing services in Thailand is consistent with that described in Ferguson et al. (2013) – in which Big N audit firms dominate only the large-client segment – the results show that Big N auditors charge higher audit fees and earn higher fee premiums compared with non-Big N auditors in both the small- and large-client segments of the audit market. Research limitations/implications The evidence from this study reveals the existence of Big N fee premiums across market segmentations. Audit price differentials between Big N and non-Big N firms in both small- and large-client market segments might concern regulators regarding competition in the audit market with respect to whether the Big N firms are charging uncompetitive audit fees. These findings also imply that audit pricing varies across countries and the Big N price deferential is typically larger in emerging markets than in more developed audit markets and that it might be inadequate to study single-country audit pricing. However, the question whether the Big N fee premium results from Big N product differentiation is not directly investigated in this study. Originality/value Because earlier studies focusing on audit fee premiums have been conducted using data from the USA and Australia, the findings add to the limited evidence regarding audit fee premiums in an emerging country such as Thailand.
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Choi, Jong-Hag, Jeong-Bon Kim, Xiaohong Liu und Dan A. Simunic. „Cross-Listing Audit Fee Premiums: Theory and Evidence“. Accounting Review 84, Nr. 5 (01.09.2009): 1429–63. http://dx.doi.org/10.2308/accr.2009.84.5.1429.
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ABSTRACT: We study the effects of cross-listings on audit fees. We first develop a model in which legal environments play a crucial role in determining the auditor's legal liability. Our model and analysis predict that auditors charge higher fees for firms that are cross-listed in countries with stronger legal regimes than they do for non-cross-listed firms and that the cross-listing audit fee premium increases with the difference in the strength of legal regimes between the cross-listed foreign country and the home country. We then empirically test these predictions. The results of our cross-country regressions strongly support our predictions. In addition, we find no significant cross-listing fee premium for firms that are cross-listed in countries whose legal regimes are. no stronger than those of their home countries. This suggests that cross-listing audit fee premiums are associated with increased legal liability and not with increased audit complexity per se. Our findings help explain why cross-listing premiums occur and what determines their magnitude.
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Anisa, Ertina Nur’, und Yunita Christy. „Pengaruh Audit Fee, Opini Audit Going Concern, Ukuran Perusahaan, Pergantian Manajemen dan Kepemilikan Publik Terhadap Auditor Switching“. Perspektif Akuntansi 2, Nr. 3 (05.10.2020): 311–20. http://dx.doi.org/10.24246/persi.v2i3.p311-320.
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ABSTRACT
This study is to analyze the effect of audit fees, going-concern audit opinion, company size, management change, and public ownership on auditor switching both partially and simultaneously. Sample of this study are manufacturing company that has been listed on Indonesia Stock Exchange (BEI) for period 2015-2017. The data analysis technique used is logistic regression. Partial test results show that public ownership influences the auditor switching. While the audit fee, going-concern audit opinion, company size, and management change have no effect on auditor switching. Simultaneous test results indicate that the audit fee, going-concern audit opinion, company size, management change, and public ownership are able to explain the occurrence of auditor switching in manufacturing companies listed on Indonesia Stock Exchange in 2015-2017 by seven percent and the remaining ninety three percent explained by other variables outside the research model.
Keywords: Auditor switching, Audit fee, going concern audit opinion, company size, management turnover, public ownership
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Chiu, Tiffany, Feiqi Huang, Yue Liu und Miklos A. Vasarhelyi. „The impact of non-timely 10-Q filings and audit firm size on audit fees“. Managerial Auditing Journal 33, Nr. 5 (08.05.2018): 503–16. http://dx.doi.org/10.1108/maj-10-2017-1673.
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Purpose Prior studies suggest that non-timely 10-Q filings indicate higher potential risks than non-timely 10-K filings. Furthermore, larger audit firms tend to be more risk-averse and conservative about reporting. Inspired by these research streams, this paper aims to investigate the influence of non-timely 10-Q filings on audit fees and the impact of audit firm size on this association. Design/methodology/approach The cross-sectional audit fee regression model used in this study is similar to that used in prior audit fee research (Simunic, 1980; Francis et al., 2005; Hay et al., 2006; Wang et al., 2013). The model includes the following five major characteristics that would influence auditors’ fee decisions: auditee size (LNAT), complexity (REIVAT, FOREIGN, SEG), financial condition (LOSS, ROA, GROWTH, ZSCORE), special events (ICW, RESTATE, INITIAL, GC) and auditor type (BIG4). To examine the effect of non-timely 10-Q filings on audit fees, the variable NT10Q is included in the audit fee model. Findings The results indicate that when both non-timely 10-K and non-timely 10-Q filings are included in the regression model, only non-timely 10-Q filings are significantly associated with higher audit fees, suggesting that the presence of non-timely 10-Q filings signals more serious underlying problem than non-timely 10-K filings in the audit fees decision processes. In addition, we find that audit fees for firms audited by Big 4 auditors are 26.4 per cent higher when those firms file non-timely 10-Q reports, whereas there is no significant association between non-timely 10-Q filings and audit fees for firms audited by non-Big 4 auditors. Practical implications As no attention has been paid to the investigation of the impact of non-timely 10-Q filings on audit fees, with the aim of filling the gap of this specific research area, this study examines the association between non-timely 10-Q filings and audit fees and the influence of audit firm size on this association. Originality/value The contribution of this paper is threefold: first, it is the first study to examine the association between non-timely 10-Q filings and audit fees. The results show that non-timely 10-Q filings are a better and earlier indicator of audit risk than non-timely 10-K filings. Second, the results reveal that the relationship between non-timely 10-Q filings and audit fees is affected by audit firm size. Specifically, Big 4 auditors tend to charge higher audit fees in the presence of non-timely 10-Q filings, reflecting that they are more sensitive to audit risk than smaller audit firms are. Third, an examination of the quarterly effect of non-timely 10-Q filings on audit fees indicates a stronger effect from the first quarter’s non-timely 10-Q filings, compared to the second or third quarter.
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Nurjanah, Fitri, und Akhmad Imam Amrozi. „Effektivitas Komite Audit, Dewan Komisaris Independen dan Biaya Audit“. E-Jurnal Akuntansi 31, Nr. 3 (25.03.2021): 667. http://dx.doi.org/10.24843/eja.2021.v31.i03.p11.
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The purpose of this study is to analyze the effect of effectiveness of audit committee and independence board of commissioner on audit fee. This research uses samples of Non-financial companies in Indonesia Stock Exchange (IDX) in 2015-2018. The sampling technique used purposive sampling. The total number of companies used as research samples is 584 companies. Using tools SPSS 20 and testing hypothesis using linear regression. The F test indicates a stable and significant model. R square is 49,4%The result show independence board of commissioner and Effectiveness of audit committee can positively significant effect on audit fee because board of commissioners and audit committee wants a higher audit quality from the auditor.
Keywords: Board Of Commissioners; Effectiveness Of Audit Committee; Audit Fee.
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Higgs, Julia L., und Terrance R. Skantz. „Audit and Nonaudit Fees and the Market's Reaction to Earnings Announcements“. AUDITING: A Journal of Practice & Theory 25, Nr. 1 (01.05.2006): 1–26. http://dx.doi.org/10.2308/aud.2006.25.1.1.
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Effective February 05, 2001, publicly traded companies are required to disclose audit and nonaudit fees paid to their external auditors. These fee data have been used to test whether auditor independence is impaired when the external auditor provides nonaudit services to a client, usually by examining whether certain earnings characteristics are related to nonaudit fees in ways that suggest impairment. This paper follows in that tradition by testing whether the earnings response coefficient (ERC), a proxy for earnings quality, is associated with engagement profitability. Residual fees derived from a two-stage regression model that prices audit and nonaudit services simultaneously are used to proxy for engagement profitability. If the market perceives abnormally profitable engagements as a threat to auditor independence, then we would expect the ERC to be lower for firms with positive fee residuals. The paper examines the residual fee-ERC relation for annual earnings announcements immediately before and after first-time fee disclosure. We report results for alternative measures of unexpected earnings (I/B/E/S forecast errors and deviations from a seasonal random walk), different formulations of residual fees (as a dichotomous and continuous variable) and different samples. For total fees and audit fees, there is a positive association between ERCs and the level of residual fees. For nonaudit fees, there is only one combination of unexpected earnings and residual fee formulation where we observe a significantly negative association between ERCs and residual fees. The findings for audit fees are consistent with a market that interprets abnormally high audit fees as a signal of a firm's commitment to high earnings quality. The restrictive conditions under which we find a negative association between nonaudit fees and ERCs provide limited support for the contention that perceived auditor independence is impaired by abnormally high nonaudit fees.
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Nurjanah, Fitri, und Erina Sudaryati. „The effect of political connection and effectiveness of audit committee on audit fee“. Indonesian Accounting Review 9, Nr. 2 (29.10.2019): 227. http://dx.doi.org/10.14414/tiar.v9i2.1848.
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This study analyzes the effect of political connection and effectiveness of audit committee on audit fee. This study uses the sample of non-financial companies listed on the Indonesia Stock Exchange (IDX) in 2015-2017. They were take using a purposive sampling method. The total number of companies is 444 companies. The data were analyzed using SPSS 20 and the hypothesis testing was done using linear regression with a significance level of 5%. The F test indicates that the research model is stable and significant. The value of R square is 38.4%, indicating that there are other variables that can affect the model by 61.6%. The results of this study show that political connection has a significant positive effect on audit fee and the effectiveness of audit committee also has a significant positive effect on audit fee because audit committee wants a higher audit quality from the auditor.
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MohammadRezaei, Fakhroddin, und Norman Mohd-Saleh. „Auditor switching and audit fee discounting: the Iranian experience“. Asian Review of Accounting 25, Nr. 3 (11.09.2017): 335–60. http://dx.doi.org/10.1108/ara-06-2016-0070.
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Purpose The purpose of this paper is to examine the impact of auditor switching on audit fee discounting in Iran. The increased competition in the Iranian audit market following audit market liberalization in 2001 has resulted in a rapid increase in auditor switching and reduces the relative bargaining power of auditors compared to the clients. It is expected that auditor switching results in fee discounting because the relative bargaining power of an auditor (client) is likely to be at the minimum (maximum) point during the initial period of engagement. Since the increased bargaining power of a client in initial year seems to be different in the case of different type of auditor switching (from a state auditor to a private and from a private auditor to another), the magnitude of fee discounting is expected to be different. Design/methodology/approach The objective is tested using a sample of 1,022 firm-year observations between 2001 and 2010. This study applies the multivariate regression model using the first difference specification of audit fee as a dependent variable. Findings Multivariate analysis reveals that auditor switching results in 14 percent of fee discounting. In addition, the results show that 18 and 13 percent of fees discounting during the initial year of engagement arise from cases of auditor switching involving a change from state auditors to private auditors, and a change from one private auditor to another, respectively. The findings support bargaining power view explanation in relation to audit fees discounting in initial year engagement. Originality/value This study is the first to examine the impact of auditor switching (and analyzed different types of auditor switching) on audit fee discounting using the bargaining power view.
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Francis, Jere R., und Dechun Wang. „Impact of the SEC's Public Fee Disclosure Requirement on Subsequent Period Fees and Implications for Market Efficiency“. AUDITING: A Journal of Practice & Theory 24, s-1 (01.12.2005): 145–60. http://dx.doi.org/10.2308/aud.2005.24.s-1.145.
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This study investigates the impact of the U.S. Securities and Exchange Commission's (SEC) mandated public disclosure of audit fees on subsequent period audit pricing. Our theoretical model predicts that the initial public disclosure of fees will lead to greater precision and reduced dispersion (less variance) in subsequent period fees. Using the new fee disclosures in the first two disclosure years (2000 and 2001), we find significantly smaller variances in audit fees as predicted for 2001 relative to 2000. In addition, we document that those clients that were “overcharged” (“undercharged”) in 2000 have significantly lower (higher) fees in 2001. However, there is greater downward fee adjustment than upward adjustment that suggests that clients have bargaining power over auditors. We also document that subsequent period fees appear to have completed the adjustment process by the second post-disclosure year (2002) with subsequent fees adjusting on average around 0.31 percent for each one percent of fee surprise in 2000. In sum, the evidence indicates that public disclosure has improved the precision of audit pricing (less variance) and this is a potentially more fundamental and lasting consequence of public disclosure, and transcends the SEC's original rationale, which was more narrowly premised on the conjectured adverse effect of nonaudit services on auditor independence.
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Stanley, Jonathan D. „Is the Audit Fee Disclosure a Leading Indicator of Clients' Business Risk?“ AUDITING: A Journal of Practice & Theory 30, Nr. 3 (01.08.2011): 157–79. http://dx.doi.org/10.2308/ajpt-10049.
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SUMMARY This study hypothesizes a link between observed audit prices and future reported changes in clients' economic condition. As predicted, results from a traditional audit fee model, estimated using a large sample of U.S. public company engagements spanning from 2000 to 2007, reveal a significant inverse relation between audit fees and the one-year-ahead change in a measure of clients' operating performance. Additional analysis indicates that the relation extends to more forward-looking changes (up to five years ahead) and is stronger for negative versus positive changes in performance. Results also indicate that audit fees reflect future changes in clients' earnings that are unaccounted for by analysts' forecasts. In contrast, the findings reveal little evidence of a relation between audit fees and future changes in clients' solvency, including bankruptcy status. Collectively, the study's results provide initial evidence suggesting that the audit fee disclosure is a leading indicator of the operating performance dimension of clients' business risk. Data Availability: Data are available from public sources cited in the text.
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Permatasari, Indah Yunita, und Christina Dwi Astuti. „PENGARUH FEE AUDIT, ROTASI AUDITOR, DAN REPUTASI KAP TERHADAP KUALITAS AUDIT“. Jurnal Akuntansi Trisakti 5, Nr. 1 (16.08.2019): 81. http://dx.doi.org/10.25105/jat.v5i1.4839.
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<em>The purpose of this research was to analyze the influence of audit fee, audit switching and audit firm reputation on audit quality. The proxy of audit quality is using discretionary accrual Modified Jones model (1994). Data in the current research were secondary data obtained from the financial statements of property, real estate and construction companies listed on the Indonesia Stock Exchange during 2014-2016. Fourty-four (n = 44) companies was selected using the purposive sampling method as the sample of the current study (N=132). Data was analyze during the multiple regression analysis. The resulted showed that audit fee, audit switching and audit firm reputation has positive significant effects on audit quality.</em>
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Prayurgi, Gandhi. „PENGARUH KEPEMILIKAN PERUSAHAAN, CORPORATE GOVERNANCE, DAN EARNINGS MANAGEMENT TERHADAP TIPE AUDITOR DAN AUDIT FEES (Studi Empiris Pada Perusahaan yang Terdaftar di BEI dan IICG Tahun 2011-2013)“. Jurnal Akuntansi Indonesia 4, Nr. 2 (14.11.2016): 109. http://dx.doi.org/10.30659/jai.4.2.109-122.
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Audit Fee is a dilemmatic problem for an auditor because auditor get a fee from the audited client. On the other side, auditor must be independent in giving their opinion while they also get a fee for services rendered. The purpose of this study is to provide information to companies, auditors, and other information users about the factors that influence the company in selecting the type of auditors and audit fees. The independent variables in this study ar Firm Ownership, Corporate Governance, and Earnings Management with the dependent variablesare the type of auitor and audit fees. Firm ownership in this study was divided into two, the state-owned companies (BUMN)and private companies. Earnings management was measured by discreationary acccruals (DACC) Jones model. Corporate governance in this study was measured by looking at Corporate Governance Perception Index (CGPI). Type of auditors in this study were divided into two, KAP the big four and non-the big four. Audit fees in this studywas measured by natural logarithm of the professional fees. The population of this study is companies listed in the Indonesian Stock Exchange (IDX) and also listed in the Indonesian Institute of Corporate Governance (IICG) in 2011- 2013 with the total sample is 51 company datas for 3 years. The hypotheses in this study were tested using logistic regression and multiple regression. The results of this study indicate that firm ownership does not influence the selection of the type of auditors and audit fees, while corporate governance and earnings management influence the selection of the type of auditors and audit fees.
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Krauss, Patrick, und Henning Zulch. „Non-Audit Services And Audit Quality: Blessing Or Curse?“ Journal of Applied Business Research (JABR) 29, Nr. 2 (11.02.2013): 305. http://dx.doi.org/10.19030/jabr.v29i2.7640.
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This study investigates whether and how audit quality is associated with the provision of non-audit services by the statutory auditor. Using a sample of 1,008 firm observations of major German listed companies for the sample period 2004-2011, our study is one of the first to thoroughly analyze this issue empirically for the German audit market. Consistent with prior studies we choose discretionary working capital accruals as our proxy for audit quality. Our empirical results demonstrate that total non-audit fees in general and audit related fees in particular are negatively associated with audit quality, while provided tax and other advisory services have an insignificant impact on audit quality. Our results imply that non-audit fees are a significant factor with regard to auditor independence and economic auditor-client bonding while we are not able to detect compensating high knowledge spillover effects from these services. The empirical results are robust to alternative accrual measures and estimation model specifications, while our empirical evidence is not robust with regard to alternative fee measures.
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Devota, Amadea, und Hero Priono. „Etika Auditor sebagai Pemoderasi Fee Audit, Independensi, dan Kompetensi terhadap Kualitas Audit“. Jurnal Ilmu Sosial, Manajemen, Akuntansi dan Bisnis 2, Nr. 2 (25.05.2021): 14–28. http://dx.doi.org/10.47747/jismab.v2i2.243.
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The objective of this research is to test and analyze the impact of the audit fee, independency, and competency on audit quality with ethics of auditor as moderation variable of Public Accountant Firm in Surabaya. The sample used in the research as many as 10 Public Accountant Firms which are represented by 46 people of auditors and selected by convenience sampling method. Questionnaires is used as the primary data of this research, distributed right to the auditors in the Public Accountant Firms in Surabaya City that are used as research sample. The data analysis technique used Structural Equation Model (SEM) based Partial Least Square Analysis (PLS). The results in this research showed that (1) audit fee had positive and significant influence on audit quality, (2) independency had negative and significant influence on audit quality, (3) competency had positive and significant influence on quality audit, (4) ethics of auditor could moderate the influence on audit fee of quality audit, (5) ethics of auditor couldn’t moderate the influence on independency of quality audit, and (6) ethics of auditor could moderate the influence on competency of quality audit.
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Fargher, Neil L., Brian W. Mayhew und Michael Wilkins. „The Pricing of Assurance Services in Secondary Equity Offerings“. Journal of Accounting, Auditing & Finance 20, Nr. 3 (Juli 2005): 187–207. http://dx.doi.org/10.1177/0148558x0502000301.
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This paper examines the pricing of assurance services in secondary equity offerings (SEOs). Our empirical model extends initial public offering (IPO) fee specifications to include variables that are unique to, or more relevant for, secondary offerings. We document an inverse relationship between SEO fees and a client's ability to delay its secondary offering, suggesting that auditors do not charge as much for SEOs made by relatively mature firms. The relationship reverses, however, when the client is required to use more comprehensive types of filings (i.e., when assurance effort is higher). We also show that fees are higher when the SEO comes to market during the client's annual audit period. This finding is consistent with the shifting of year-end audit fees to SEO engagements in an effort to boost earnings for both clients and auditors (at the expense of shareholders). We cannot, however, unambiguously conclude that fee shifting exists, as the observed fee premium could be explained by other factors.
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Humaira, Iffah, und Efrizal Syofyan. „Pengaruh Fungsi Audit Internal, Kompleksitas Perusahaan, Dan Risiko Perusahaan Terhadap Fee Audit“. JURNAL EKSPLORASI AKUNTANSI 2, Nr. 3 (06.11.2020): 3356–71. http://dx.doi.org/10.24036/jea.v2i3.288.
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This study aims to determine the effect of internal audit function, company complexity, and company risk on audit fees. The population in this study were Manufacturing companies listed on the Indonesia stockExchange (IDX) in 2015 to 2018. The research sample was determined using a purposive sampling method, and a total sample of 46Manufacturing companies. The data used is secondary data. Data collection techniques with documentation at www.idx.co.id . The analytical method used is Regression Analysis with Random Effect Model (REM). The results showed that (1) the internal audit function, company complexity, and company risk simultaneously have a significant effect on audit fees, (2) the internal audit function had not significant effect on audit fees, (3) company complexity had a positive and significant effect on audit fees, and (3) company riskhad not significant effect on audit fees.
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Ulupui, I. gusti ketut agung. „The Influence of Operating Cycle, Cash Flow Volatility, and Audit Fee on Earnings Persistence (The Indonesian Cases)“. SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS 4, Nr. 1 (31.05.2020): 1. http://dx.doi.org/10.29259/sijdeb.v4i1.1-20.
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Abstract: Research is aiming at analyzing the influence of operating cycle, cash flow volatility, and audit fee on earnings persistence by studying manufacturing companies listed on Indonesia Stock Exchange (IDX) within 2013–2017. This research studied secondary data from documents in the forms of annual reports and financial reports of the companies taken from IDX website. After conducting a purposive sampling method, 12 companies were chosen to be the samples with 60 total observations. The data were analyzed by using descriptive statistics and panel data regression using Common Effect Model (CEM) processed by Eviews 10. Earnings persistence as the dependent variable was proxied by the regression coefficient from the regression model of previous year earnings towards the current earnings. The independent variable operating cycle was proxied by the means of accounts receivable turnovers and the means of the inventory turnovers. The cash flow volatility was proxied by the standard deviation of the cash flow operation divided by the total assets. The audit fee was proxied by the natural logarithm of the amount of audit fee. The panel data regression analysis showed that operating cycle has significant influence on earnings persistence. The results explain that companies with shorter operating cycle have high earnings persistence. The results also showed that cash flow volatility and audit fee have no influence on earnings persistence. Keywords: earnings persistence; operating cycle; cash flow volatility; audit fee; manufacturing sector.
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Musa, Wasiu Ajani, Ramat Titilayo Salman, Ibrahim Olayiwola Amoo und Muhammed Lawal Subair. „Impact of firm’s specific factors on audit fee of quoted consumer goods firms“. Corporate Governance and Sustainability Review 4, Nr. 1 (2020): 47–55. http://dx.doi.org/10.22495/cgsrv4i1p4.
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Greater pricing presume on audit service has been put by the regulations of the auditing and accounting practices for the disclosure of audit fees, since audit fee is directly related to audit quality. However, the audit fees perceived by the client is often different from the amount charged by the auditors. Hence, this study investigated the impact of firm-specific characteristics on audit fees of quoted consumer goods firms in Nigeria using a purposive sampling technique. Secondary data were obtained from annual reports of the companies for the period from 2009-2016. The empirical result from Breusch-Pagan Lagrange Multiplier Test (BP-LM) produced a chi-square value of 13.94 with p-value of 0.0001 indicating that pooled ordinary least squares (OLS) will not be appropriate for the study. The Hausman test showed a chi-square of 23.55 with a p-value of 0.001 indicating that the null hypothesis is strongly rejected. Thus, the only estimate from the fixed effect model was interpreted to explain the relationship between firm-specific characteristics and audit fees of quoted consumer goods firms in Nigeria. The result revealed that auditee size, auditee risk, auditee profitability and IFRS adoption are the firm specific characteristics that impact on audit fees with only auditee size and IFRS adoption being positively related to audit fees while the other factors are negatively related to audit fees. Based on this finding, this study concluded that the firm’s specific factors are the major drivers of audit fees in Nigeria consumer goods firms. This study recommends among others that companies should implement corporate governance principles that address issues relating to board independence and committee sizes to guide activities in the consumer goods sector since profitability behave negatively with audit fees.
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Houston, Richard W., Michael F. Peters und Jamie H. Pratt. „Nonlitigation Risk and Pricing Audit Services“. AUDITING: A Journal of Practice & Theory 24, Nr. 1 (01.05.2005): 37–53. http://dx.doi.org/10.2308/aud.2005.24.1.37.
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In this study we expand the audit fee model introduced by Simunic (1980) and extended by Houston et al. (1999) by adding a third factor, nonlitigation risk, which refers to general business risks and/or opportunities that extend beyond litigation risk or the conduct of the audit (e.g., opportunities for future audit and nonaudit revenues, potential damage to the auditor's reputation from involvement with a client). In an experiment, we ask audit partners and managers to assess various risks and develop an audit plan after reviewing one of four risk-increasing audit scenarios—the discovery of an error, the discovery of a GAAP inconsistency, a client buyout where the audited financial statements are used in the determination of the exchange price, and the loss of a major client customer. We find that, in the error and buyout cases, audit fee increases are explained only by the planned increase in audit investment; in the GAAP inconsistency case, the audit fee increase is explained in part by the planned increase in audit investment, but to a greater extent by residual litigation risk; in the loss of customer case, the audit fee increase is explained by the planned audit investment, residual litigation risk, and nonlitigation risk. These results suggest that business risk is comprised of at least three factors (acceptable audit risk, residual litigation risk, and nonlitigation risk), and that auditors are compensated to act as auditors, provide insurance for investor losses, and bear risks associated with factors that extend beyond the conduct of the audit. We also discuss how nonlitigation risk can clarify the results of previous research and be used in future research.
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Lim, Lucy. „Reexamining the influence of large clients on office-level auditor reporting decisions“. American Journal of Business 31, Nr. 1 (04.04.2016): 4–16. http://dx.doi.org/10.1108/ajb-06-2015-0020.
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Purpose – This paper revisits the Reynolds and Francis’ (2001) study via the use of a more current dataset, incorporation of improvements into the accrual model and the use of actual fee data vs estimates. Using the improved analyses, the purpose of this paper is to examine whether more conservative auditors’ reports on larger clients are still evident. Design/methodology/approach – The paper follows Reynolds and Francis (2001) in using a regression model with White-adjusted t-statistics for the discretionary accrual model and a logistic model for going concern analysis. The most current discretionary accrual model is used to improve the original model, use actual fee data (not available previously), and add analyses using the two components of total fees (i.e. audit and non-audit fees). Findings – As opposed to Reynolds and Francis (2001), the results show that the Big Five auditors are less conservative with higher-paying clients as they allow their clients to have more discretionary accruals. While Reynolds and Francis (2001) found that auditors are more likely to report going concern opinions for higher-paying clients, the results in this paper does not show any difference in the propensity of auditors to issue going concern opinions. Originality/value – This study replicates Reynolds and Francis (2001) using more recent US data, applying the most recent discretionary accrual model, using the actual fee data, and adding analyses using total fees decomposition.
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Steller, Marcel, und Erich Pummerer. „Auditor’s Income Taxation and Audit Quality“. SAGE Open 11, Nr. 3 (Juli 2021): 215824402110408. http://dx.doi.org/10.1177/21582440211040833.
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We use an analytical research model to analyze the effect of the auditor’s personal income tax on audit effort. We show that the auditor’s level of care crucially depends on the tax rate and amount of loss recognition. Taxes may cause paradoxical effects on the auditor’s effort, audit quality, and marginal audit fee if profits and losses are taxed differently or in case of risk-averse decision-makers. Therefore, compared with the pretax setting, taxes have distortional effects. Thus, common auditing standards (e.g., International Standards on Auditing framework) will imply diverse audit quality and marginal audit fees depending on the respective national tax law. Our results are relevant for standard setters, auditors, and financial statements’ addressees.
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Smith, Thomas J. (Tom), Julia L. Higgs und Robert E. Pinsker. „Do Auditors Price Breach Risk in Their Audit Fees?“ Journal of Information Systems 33, Nr. 2 (01.08.2018): 177–204. http://dx.doi.org/10.2308/isys-52241.
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ABSTRACT Data security breaches have been shown in the literature to negatively affect firm operations. Auditors serve as an important, external governance mechanism with respect to a firm's overall risk management protocol. Consequently, our study examines whether auditors price breach risk into their fees and if a firm's internal governance can mitigate the potential increases in audit fees. Using a sample of breached firms ranging from 2005–2014, we adapt the Houston, Peters, and Pratt (2005) model to explore how auditors view audit risk related to breach risk. We find that breaches are associated with an increase in fees, but the result is driven by external breaches. Our evidence suggests the presence of board-level risk committees and more active audit committees may help mitigate the breach risk audit fee premium. Additional evidence suggests that both past breach disclosures as well as future disclosures are associated with audit fees.
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Menon, Krishnagopal, und David D. Williams. „Long-Term Trends in Audit Fees“. AUDITING: A Journal of Practice & Theory 20, Nr. 1 (01.03.2001): 115–36. http://dx.doi.org/10.2308/aud.2001.20.1.115.
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The audit fees literature contains little by way of systematic evidence on long-term trends in audit fees. This study analyzes trends in audit fees from 1980 through 1997, adjusting for changes in client size, complexity, and risk. The sample is restricted to clients of Big 6 firms that voluntarily disclosed audit fees in the period 1980–1997. Evidence is found that audit fees increased in the 1980s but stayed flat in the 1990s. Most important, a significant increase is noted in 1988, the year in which the Auditing Standards Board issued the “expectation gap” standards. These results hold even after controlling for wage increases in accounting firms, suggesting an expansion of auditing effort. There is no evidence that auditors obtain any price premium from industry specialization. The 1989 Big 8 mergers appear to have had a short-term, but not long-term, effect on fees. Finally, the magnitude of the audit fee model coefficient for accounts receivable and inventory has declined over the period, presumably due to productivity improvements.
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Salehi, Mahdi, Farzaneh Komeili und Ali Daemi Gah. „The impact of financial crisis on audit quality and audit fee stickiness: evidence from Iran“. Journal of Financial Reporting and Accounting 17, Nr. 2 (24.06.2019): 201–21. http://dx.doi.org/10.1108/jfra-04-2017-0025.
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Purpose There is a few studies about stickiness and changes in audit fees. In previous studies, researchers focused on fees behavior, which is expected to change in the short term, regardless of mentioning stickiness of fees and its possible changes. In this study, the authors investigate stickiness of audit fees and the influential factors, specifically audit quality and financial crisis in an emerging economy. Design/methodology/approach Audit quality is examined under three main criteria, namely, auditor size, auditor industry specialization and auditor tenure. The Altman adjusted bankruptcy model is used to identify firms’ financial crisis. In this study, listed companies in Tehran stock exchange market is investigated during the period of 2009-2015. Multiple regression models are used to test research hypotheses. Furthermore, Chow and Hausman tests are selected to choose among hybrid, fixed and random effects models. Findings The findings show no significant relationship between audit quality and audit fees stickiness. The authors also find that financial crisis has no impact on the association between audit quality and audit fees stickiness. Originality/value The current study almost is the first study, which conducted in emerging market of Iran. So, the results may play a helpful role for developing nations.
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Bhattacharya, Arnab, und Pradip Banerjee. „An empirical analysis of audit pricing and auditor selection: evidence from India“. Managerial Auditing Journal 35, Nr. 1 (06.01.2019): 111–51. http://dx.doi.org/10.1108/maj-11-2018-2101.
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Purpose This paper aims to examine various factors affecting the pricing of audit services and the selection of auditors in the Indian audit market. This paper also aims to investigate the impact of financial distress conditions on the audit pricing and auditor choice decisions of a firm, particularly in the context of a developing economy. Design/methodology/approach The sample comprises 22,644 firm-years for 1,366 Indian firms from 1990 to 2015. The authors adopt ordinary least squares regression technique to model audit fee, and logistic regression technique to model auditor choice as a function of various factors relating to firm attributes and auditor characteristics. Findings This paper finds that auditors tend to charge an audit fee premium when they are affiliated to a Big 4 auditor, have industry specialization or jointly provide auditing and non-auditing services. Additionally, firms with larger boards, higher proportion of independent board of directors and CEO–Chairman separation are more likely to choose a Big 4-affiliated auditor. The results also suggest that financially distressed firms tend to pay significantly lower audit fees and are more likely to choose non-Big 4 auditors. Originality/value This paper is among the few studies which investigate how financial distress impacts the audit pricing and auditor choice decisions of a firm in the context of emerging economies. The findings of this paper raises serious concerns about the credibility of the audited financial statements and corporate governance mechanisms of firms undergoing financial distress. The empirical results of this paper have strong implications for practitioners, regulators and investors.
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Liu, Chenyong, und Chunhao Xu. „The effect of audit engagement partner professional experience on audit quality and audit fees: early evidence from Form AP disclosure“. Asian Review of Accounting 29, Nr. 2 (08.02.2021): 128–49. http://dx.doi.org/10.1108/ara-08-2020-0121.
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PurposeThe purpose of this study is to examine the effect of audit engagement partner's professional experience on audit quality. The authors also investigate the relationship between the audit partner's experience and audit fees in both Big 4 and non-Big 4 accounting firms.Design/methodology/approachSince the Public Company Accounting Oversight Board (PCAOB) officially enacted Rule 3211 in 2017, US accounting firms are required to disclose detailed information of engagement partners in Form AP (PCAOB, 2015b). The authors obtained a sample of 2,283 audit partners from Form AP and hand collected their individual professional experience data through Certified Public Accountant (CPA) database, corporate disclosure and social media sites (e.g. Linkedin). Econometric models with fixed effects are used in this study to test our hypotheses. Two-stage least square (2SLS) model is used in the robustness test.FindingsThe authors find that the relationship between audit engagement partner's professional experience and audit quality is concave. It indicates that audit quality is increasing during the early stage of engagement partners' career and then decreases as the partners approaching the late-career phase. Further, the authors find that partner's professional experience is positively associated with audit fees in non-Big 4 accounting firms but not significantly associated with audit fees in Big 4 accounting firms.Practical implicationsThe finding of how auditor experience impacts audit quality can be useful for accounting firms to better plan their staffing in auditing engagements. This study’s results are also helpful for small accounting firms to optimize their pricing strategy.Originality/valueThis study provides new empirical evidence about the relation between auditor professional experience and audit quality. Furthermore, the authors extend the literature of audit fee determinants by testing the joint effects of audit firm-level factors and auditor individual-level professional experience on audit fees.
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Husain, T., und I. Gusti Ayu Intan Saputra Rini. „The Audit Quality and Audit Delay: Evidence from Indonesia“. Business Perspective Review 2, Nr. 3 (01.11.2020): 22–32. http://dx.doi.org/10.38157/business-perspective-review.v2i3.195.
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Purpose: This study specifically aims to identify the impact of Audit Quality on Audit Delay. Audit Quality is measured by the proxy log natural fee audit (LNFE).
Methods: This is a causal research with quantitative analysis. This study involves six companies listed in the sub-sectors of Cable under the manufacturing sector in the Indonesia Stock Exchange for the period of 2013-2019. It applied panel data set in a regression model using STATA MP - Parallel Edition Ver14.00 application.
Results: The findings show that the Audit quality has a significant negative impact on the Audit Delay with an average delay of 83.62 days.
Implications: This study could be extended further by considering all manufacturing firms of IDX which may provide more insight into the audit quality with other proxies.
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Johnstone, Karla M. „Client-Acceptance Decisions: Simultaneous Effects of Client Business Risk, Audit Risk, Auditor Business Risk, and Risk Adaptation“. AUDITING: A Journal of Practice & Theory 19, Nr. 1 (01.03.2000): 1–25. http://dx.doi.org/10.2308/aud.2000.19.1.1.
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Little is known about how audit partners make the client-acceptance decision. In this paper, a model is developed and tested that characterizes the client-acceptance decision as a process of risk evaluation and risk adaptation. The model proposes that auditors will evaluate client-related risks (e.g., financial viability, and internal control) and use that evaluation to determine if the audit firm will suffer a loss on the engagement via a lack of engagement profitability or future litigation. The model proposes that auditors will adapt to the client-acceptance risks by using three strategies: (1) screening clients based on their risk characteristics; (2) screening clients based on the audit firm's risk of loss on the engagement; and (3) more proactively adapting using strategies including adjusting the audit fee, making plans about necessary audit evidence, making plans about personnel assignment, and/or adjusting the amount of data collected during the client-acceptance process. To test the model, an experiment was conducted using 137 highly experienced audit partners as participants. The results show that the partners considered the relationships between client-related risks and used their evaluation of those risks to evaluate the audit firm's risk of loss on the engagement. In terms of risk adaptation, partners screened clients based on the clients' risk characteristics and based on the audit firm's risk of loss on the engagement. Contrary to prediction, the partners did not use more proactive risk-adaptation strategies (e.g., adjusting the audit fee, making plans about necessary audit evidence, etc.) to make less “acceptable” clients more acceptable. It appears that avoiding risk, rather than proactively adapting to risk, is descriptive of how audit partners currently make the client-acceptance decision.
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Nuraeni, Risma, Sri Mulyati und Trisandi Eka Putri. „FAKTOR-FAKTOR YANG MEMPENGARUHI PERSISTENSI LABA (Studi Kasus pada Perusahaan Property dan Real Estate yang Terdaftar di Bursa Efek Indonesia Tahun 2013-2015)“. ACCRUALS 2, Nr. 1 (11.01.2019): 82–112. http://dx.doi.org/10.35310/accruals.v2i1.8.
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audit, dan konsentrasi pasar terhadap persistensi laba. Data yang digunakan adalah data perusahaan property dan real estate yang terdaftar di Bursa Efek Indonesia (BEI) pada tahun 2013-2015.
Sampel dipilih dengan menggunakan motode purposive sampling. Sampel yang sesuai kriteria diperoleh sebanyak 32 perusahaan selama periode pengamatan 2013-2015, jadi jumlah akhir data observasi yaitu 96 (32 x 3). Kemudian data dianalisis dengan menggunakan model analisis regresi data panel dengan aplikasi EViews 9.
Hasil penelitian menunjukan bahwa kepemilikan manajerial tidak berpengaruh terhadap persistensi laba, karena sedikitnya persentasi kepemilikan saham oleh manajerial. Ukuran perusahaan berpengaruh negatif terhadap persistensi laba, sedangkan leverage, fee audit dan konsentrasi pasar berpengaruh positif terhadap persistensi laba. Variabel kepemilikan manajerial, ukuran perusahaan, leverage, fee audit dan konsentrasi pasar secara bersamasama berpengaruh terhadap persistensi laba
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Salehi, Mahdi, Hossein Tarighi und Samaneh Safdari. „The relation between corporate governance mechanisms, executive compensation and audit fees“. Management Research Review 41, Nr. 8 (20.08.2018): 939–67. http://dx.doi.org/10.1108/mrr-12-2016-0277.
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Purpose This paper aims to investigate the effects of some corporate governance mechanisms and executive compensation on audit fees in an emerging market. Design/methodology/approach The study population consists of 540 observations and 90 listed companies on the Tehran Stock Exchange during the years 2009-2014. The statistical model used in this study is a multivariate regression model; besides, the statistical technique used to test the hypotheses proposed in this research is panel data. Findings The changes in the value of a CEO’s own firm stock option portfolio, in thousands of rials (Iran’s currency), for a 0.01 change in stock return volatility and stock price are defined as Vega and Delta, respectively. The results demonstrated that there is a positive association between audit fees and delta, but not Vega; this means that a fee premium is linked to CEO Delta incentives. The findings show that Iranian companies pay more audit fees when they give managers more rewards. In addition, the results show that there is not a significant relationship between fees resulting from audit risk and Delta and Vega incentives of the board. Inconsistent with agency theory, the authors found that the independence of board members did not have any effect on audit fees. As a final point, the outcomes of the paper demonstrate that managers who invest in companies under their own management do not have any impact on the amount of audit fee. To put it another way, there is not any significant connection between the board ownership and audit fees. Practical implications This is one of the most important studies that simultaneously surveys the impacts of corporate governance mechanisms and executive compensation in the Iranian audit market. The results of this study will reveal more than the role of corporate governance mechanisms for society and users of financial statements because as tools on the CEO actions, they always have to pay attention to the implementation of corporate principles in the economic entity’ operation. Originality/value The present study has examined the relationship between two cases of corporate governance mechanisms named the board independence and the board ownership with audit fees in a country where, to the authors’ knowledge as in most other developing markets, such a relationship has not been a subject of empirical research. Moreover, the use of a two-dimensional measure of executive compensation, namely, Delta and Vega incentives, primarily considering research undertaken in an emerging market, as a valuable contribution may be observed.
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Miglani, Seema, und Kamran Ahmed. „Gender diversity on audit committees and its impact on audit fees: evidence from India“. Accounting Research Journal 32, Nr. 4 (04.11.2019): 568–86. http://dx.doi.org/10.1108/arj-01-2018-0001.
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Purpose The purpose of this study is to examine the relationship existing between gender diverse (women directors) audit committees and audit fees. Design/methodology/approach The authors use a sample of 200 listed Indian firms over a four-year period (2011-2014). Ordinary least squares regression is used to assess whether and how the presence of women directors on audit committees affects the fee paid to the external auditor in India. To deal with the self-selection bias, the authors use a two-stage model developed using Heckman’s (1976) method. Findings The results show a significant positive relationship between the presence of a woman financial expert on the audit committee and audit fees after controlling for a number of firm-specific and governance characteristics and potential endogeneity with the propensity-matching score analysis. From the demand-side perspective of audit pricing, the results indicate that women financial experts on audit committees increase the need for assurance provided by external auditors. Using interaction terms, the authors find that women with financial expertise on an audit committee have a stronger association with audit fees as entity becomes more complex. Research limitations/implications The findings suggest that audit committees with women financial experts are likely to demand higher audit quality, ceteris paribus. Practical implications Gender of the financial expert is critical to the audit committee’s effectiveness. The findings of this study have implications for the composition of an audit committee in a firm. Originality/value This study contributes to the extant literature by examining the less-researched topic of the association between the women representation on audit committees and audit fees. It also offers further empirical evidence that will influence the debate on the importance of gender diversity in corporations.
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Onatuyeh, E. A., und I. Ukolobi. „Tax Aggressiveness, Corporate Governance and Audit Fees: A Study of Listed Firms in Nigeria“. International Journal of Financial Research 11, Nr. 6 (30.11.2020): 278. http://dx.doi.org/10.5430/ijfr.v11n6p278.
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The concept of audit fee has received immense empirical investigation in literature. However, these vast studies have not sufficiently explored the relation of the concept with tax aggressiveness and corporate governance. This study therefore sought to provide empirical evidence as to whether tax aggressive and corporate governance mechanisms are significantly associated with audit fees among listed firms in Nigeria. Leaning on the agency and stakeholder theories, the study examined the measures of tax aggressiveness of effective tax rate and cash tax rate as well as corporate governance mechanisms of board gender diversity, audit committee diligence, and board independence; and how these variables explain changes in external audit fees. A sample of one hundred and seven (107) firms from the entire firms quoted on the Nigerian Stock Exchange as at December, 2018 was utilised. Data were sourced solely from annual financial statements of the studied firms over a ten-year period (2009 to 2018). The panel regression technique, with preference for the random effect model based on the outcome of the Hausman test, was employed to estimate the balanced panel data. The results of the study showed that cash tax rate, audit committee diligence and board independence all exert positive and significant effect on audit fees. Surprisingly, the study revealed a positive but statistically insignificant link between board gender diversity and audit fees. This result may not be unconnected with the low presence of female directors on the board of the firms investigated. In light of the findings, we therefore recommend that more female gender should be allowed to sit on the boards of listed firms in Nigeria in line with the Norwegian model of 40% female gender representation and the Federal Government 35% Affirmative Action. We also recommend that board independence should be encouraged more so as to enhance their oversight functions, and promote quality financial reporting and audit amongst listed firms in Nigeria.
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Mulyani, Ika. „The Effect of Auditor Ethics, Auditor Experience, Audit Fees, and Auditor's Motivation on Audit Quality (Case study of a Public Accounting Firm in Semarang)“. MALIA: Journal of Islamic Banking and Finance 3, Nr. 2 (25.09.2020): 139. http://dx.doi.org/10.21043/malia.v3i2.6879.
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<p class="s20"><span class="s14"><span class="bumpedFont15"> </span></span><span class="s19"><span class="bumpedFont15">The purpose of this paper is to identify the effect of Auditor Ethics, Auditor Experience, Audit Fees, and Auditor’s Motivation on Audit Quality.</span></span></p><p class="s22"><span class="s4"><span class="bumpedFont15">The population of this research is the Auditor at the Public Accountant Office in Semarang. The sampling technique uses Simple Random Sampling. The data used in this study are primary data taken by distributing questionnaires. The analysis model uses multiple linear regression analysis models, while the analysis technique uses the Statistical Test F, the Coefficient of Determination </span></span><span class="s21"><span class="bumpedFont15">(</span></span><span class="s21"><span class="bumpedFont15">, </span></span><span class="s4"><span class="bumpedFont15">and the Statistical test t.</span></span></p><p class="s22"><span class="s4"><span class="bumpedFont15">The results of the analysis and discussion showed that the auditor's ethical variables, auditor's experience, audit fees, and auditor's motivation simultaneously had a significant effect on audit quality. Auditor ethics, auditor experience, and Auditor Motivation on the quality of each audit partially significant effect on audit quality. </span></span><span class="s4"><span class="bumpedFont15">Whereas Audit Fee partially has no significant effect on Audit Quality.</span></span></p>
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Alfraih, Mishari M. „The role of audit quality in firm valuation“. International Journal of Law and Management 58, Nr. 5 (12.09.2016): 575–98. http://dx.doi.org/10.1108/ijlma-09-2015-0049.
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Purpose The purpose of this paper is to examine the effect of audit quality on the value relevance of earnings and book value. Because joint audit is mandated for all Kuwait Stock Exchange-listed firms, it is hypothesized that the higher the quality of the audit team (as measured by the number of Big 4 audit firms in the joint audit team), the higher the value relevance of earnings and book values for equity valuation. Design/methodology/approach Consistent with prior research, the value relevance of earnings and book value is measured by the adjusted R2 derived from the Ohlson’s 1995 regression model. The number of Big 4 audit firms represented on the firm’s audit team is used as a proxy for audit quality. Three tiers of audit quality exist, namely, two non-Big 4 audit firms, one Big 4 and one non-Big 4 audit firms or two Big 4 audit firms. To address this paper’s objective, the association between audit quality and the value relevance of earnings and book value were examined using four approaches. The final sample consists of 1,836 firm-year observations and covers fiscal years from a 12-year period (2002-2013). Findings Taken together, the four approaches used collectively provide empirical evidence that audit quality positively and significantly affects the value relevance of accounting measures to market participants. Importantly, the results reveal significant variations in the value relevance of earnings and book value jointly across the three possible auditor combinations. Research limitations/implications Although using auditor size as a proxy for audit quality is well established in the auditing literature, a limitation of that proxy is that it measures audit quality dichotomously, which implicitly assumes a homogeneous level of audit quality within each group. Practical implications The findings show the importance of high-quality and rigorous external audits in improving the value relevance of accounting information. Originality/value This study contributes to the extent literature on audit quality by exploring the role of audit quality in a unique institutional setting that imposes mandatory joint audits. Although prior studies have investigated the effect of joint audit pair choice on earnings management and audit fee premium, this study is the first to investigate the effect of joint audit pair choice on the value relevance of accounting information.
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Shawn, Hyuk, Hyoik Leese, Jaegyung Jung und Sanghyuk Moon. „Relation Between Real Earnings Management And Audit Quality“. Journal of Applied Business Research (JABR) 32, Nr. 3 (02.05.2016): 967–80. http://dx.doi.org/10.19030/jabr.v32i3.9666.
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Net income is composed of CFO and accruals. Auditors generally detect discretionary accruals to raise reliability of financial reporting and call upon managers to correct their financial reports according to the materiality. From these viewpoints, prior researches use the size of discretionary accruals as proxies for the audit quality. However, manager can also use CFO factors as means of earnings management. We confirm whether abnormal CFO factors, that is, real activity earnings management (hereafter RAM) by Roychordhury model(2006), can be as a proxy for the audit quality with comparing the size of RAM with existing proxies of audit quality such as auditors’ size (e.g. big4), audit time and audit fee. Our results show that the size of RAM is positively correlated with some existing proxies of audit quality. Also, we find discretionary accruals positively correlated with RAM in Korea. The result implies managers in Korea simultaneously use RAM as well as discretionary accruals as a means of earnings management.
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Firer, S., und G. Swartz. „An empirical analysis of the external audit fee in the “new” South Africa: The basic model“. South African Journal of Accounting Research 20, Nr. 1 (Januar 2006): 1–25. http://dx.doi.org/10.1080/10291954.2006.11435119.
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Omer, Thomas C., Jean C. Bedard und Diana Falsetta. „Auditor-Provided Tax Services: The Effects of a Changing Regulatory Environment“. Accounting Review 81, Nr. 5 (01.10.2006): 1095–117. http://dx.doi.org/10.2308/accr.2006.81.5.1095.
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This study investigates auditor-provided tax services from 2000 to 2002, during which fees paid to auditors for nonaudit services (NAS) were disclosed, but separate disclosure of tax service fees was voluntary. We examine changes in the market for tax NAS in 2002, as Congress debated possible prohibition of these services. Using the Heckman MLE procedure to control for selection bias in tax fee disclosure, we find that a strong pre-2002 positive association between tax fees and higher than expected audit fees weakened significantly in 2002, suggesting that some companies paying high audit fees reduced or terminated auditor-provided tax services in 2002. Our findings also suggest that auditor-provided tax services were reduced among new or short-tenure clients. Controlling for tax complexity, we also find some evidence that early “returns” (i.e., tax rate reductions) to companies from auditorprovided tax services were reduced in 2002. Finally, results of our selection model imply that the decision to voluntarily disclose fees paid to the auditor for tax services is positively associated with tax complexity and auditor tenure, and negatively associated with the proportion of NAS fees to total fees. Overall, our findings imply significant change in auditor-provided tax services prior to 2003, when separate disclosure of auditor-provided tax service fees was mandated.
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Chen, Hanwen, Liquan Xing und Haiyan Zhou. „Product market competition and audit fees: evidence from an emerging market“. Asian Review of Accounting 28, Nr. 1 (21.11.2019): 89–109. http://dx.doi.org/10.1108/ara-08-2019-0146.
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Purpose Product market competition may have various impacts on audit fees. On the one hand, according to the agency theory, product market competition can mitigate agency problems between management and shareholders. For clients with higher product market competition, auditors will lower the level of engagement risk assessment and reduce the required level of audit evidence, and hence audit fees will be lower. On the other hand, according to the audit risk model, product market competition will increase client business risk and audit engagement risk. Moreover, for clients with competition advantage, client business risk and audit engagement risk will be lower, and hence a lower audit fee. The paper aims to discuss this issue. Design/methodology/approach In this paper, the authors collect financial accounting data and audit fee data from CSMAR database. Our sample selection starts with all available observations on the Chinese listed companies during 2006–2011. Since there is a big difference in accounting practices between financial companies and other industries, the authors delete observations on financial companies. The authors further remove observations with missing data, yielding 6,709 observations for the final analysis. To define the industry, the authors use the first two digits of standard industry classification code set by China Securities Regulatory Commission. In order to reduce the effect of extreme observations, the authors also truncate the data at 1 and 99 percent. The authors use the Herfindahl–Hirschman index (HHI) and the natural logarithm of the number of listed companies within the industry to measure product market competition intensity. HHI is calculated as the sum of the squared percentage of revenues of the client firm among the total revenues of all public companies, i.e. HHI = ∑ i = 1 N ( s i / S ) 2 . N is the number of listed companies in the industry, Si is the revenues for an individual firm and S is the total revenues of all public companies within the same industry. A higher HHI score indicates fewer companies dominate the industry and hence lower intensity of competition in the product market. The second measure of industry competition intensity is LNN, the natural logarithm of the total number of public companies in the same industry of a client firm. A larger value of LNN indicates a larger number of competitors in the industry, and a higher level of competition intensity. Following the literature (Kale and Loon, 2011), the authors use Lerner index (or price-cost margin (PCM)) to measure the listed company’s competitive advantage. It is actually a measure of a firm’s power to influence product prices in the industry. The authors adopt the Peress (2010) method to estimate Lerner index as net operating income, divided by sales, i.e. PCM=(Sales–COGS–Selling expenses–Administrative expenses)/Sales. A higher value of PCM indicates more product pricing power and a higher competitive advantage of a company. The authors also use Lerner index ranking (R_PCM) to measure the competitive advantage of a company in the industry. The authors sort PCM values in ascending order in each industry and divide into ten groups. Then, the authors assign a value from one to ten to each listed company within each group in each industry. A higher R_PCM value represents higher market power and higher competitive advantage of a company. Based on Simunic (1980) framework, the authors develop the following model to test the relationship between product market competition, competition advantage and audit fees: LNAFit=β0+β1 PMCit+β2 SIZEit+β3 INVit+β4 RECit+β5 GROWTHit+β6 PRELOSSit+β7 LEVit+β8 QUICKit+β9 OPINit+β10 IBIG4it+β11 DBIG10it+β12 SWITCHit+β13 LOCATEit+β14 STATEit+∑β YearDummies+εit. Findings Using a sample of 6,709 firm-year observations from the Chinese stock market for the period of 2007–2011, the authors find that the product market competition intensity has a negative impact on audit fees, which means that agency cost effect is dominant in audit pricing at industry level. In addition, a company’s competitive advantage in the industry has a significant and negative impact on audit fees, which means that business risk effect also plays a critical role in audit pricing of individual engagement. The findings indicate that, in determining audit fees, auditors in the emerging market of China consider both the competition intensity of their clients’ product market at the industry level and the competitive advantage of the specific clients within the industry. Originality/value The findings indicate that, in determining audit fees, auditors in the emerging market of China consider both the competition intensity of their clients’ product market at the industry level and the competitive advantage of the specific clients within the industry.
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Soepriyanto, Gatot, Pamela Krisky, Yanto Indra und Arfian Zudana. „Female audit partners and accruals quality: evidence from Indonesia“. Journal of Accounting in Emerging Economies 10, Nr. 2 (01.05.2020): 305–19. http://dx.doi.org/10.1108/jaee-03-2019-0054.
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PurposeThis study examines the association between accruals quality and gender of the firm's audit engagement partner in Indonesia. Specifically, prior studies provide evidence that gender-based difference in diligence, conservatism and risk tolerance, it is plausible that female auditors may improve audit quality. Indonesia provides a valuable research setting to investigate the issue, as it is mandatory to disclose the identity of the audit partners in the audit reports.Design/methodology/approachThis study employs multivariate regression model to test the hypothesis, which examines the association between accruals quality and audit partners gender. Using a sample of Indonesian publicly listed firms, we run a panel of regression of audit quality measure proxied by abnormal accruals on female auditor variable and firm-specific controls. To triangulate the results, we also conduct sensitivity analysis using high and low category of abnormal accruals, an alternative measure of accruals quality (i.e. Beneish's M score) and propensity score matching (PSM).FindingsWe find that firms with female audit engagement partners are not associated with smaller abnormal accruals, thereby implying that female auditors may not constrain effects on earnings management. In other words, gender is not an important predictor for audit quality in Indonesia.Research limitations/implicationsWe are not able to use broader measures of audit quality such as GAAP violations/restatement, litigation or audit fee. This is because the Indonesian setting somewhat limits us to collect them due to lack of regulatory actions and/or database availability.Practical implicationsThis study will contribute to the regulators (such as Financial Service Authorities/OJK) and professionals, on the effectiveness of female audit partners in improving audit quality. The study can be used as an evidence to support the gender equality in the accounting and audit industry.Social implicationsOur findings suggest that auditor gender does not lead to the improvement of accruals quality in Indonesia. Given the fact that only 14% of firms in our sample audited by female audit partners, it is plausible that the positive traits of female top managers may not transmit to the overall audit process. As such, it is important to encourage more female involvement in top position of auditing and accounting industry is required to advance the profession and its positive impact to the society.Originality/valueThere are no prior studies in Indonesia examining the effect of audit partner gender on accruals quality using archival data. As such, this research will be the first to document such evidence and therefore can improve our understanding on the role of auditor characteristic on audit quality. We also respond to the call from DeFond and Zhang (2014) to push analysis of audit quality to the individual auditor level by examining the gender of audit partner.