... passed on to clients. This study documents a positive relation between the infrequency of Big-R restatements of financial statements across an audit office’s portfolio of publicly traded clients (which proxies for effectiveness) and lower audit fees (which proxies for efficiency), ceteris...

...Michael L. Ettredge; Juan Mao; Mary Stone; Lili Sun SUMMARY We investigate the effect of the 2019 Coronavirus pandemic (COVID-19) on audit fees and filing delays following the pandemic’s onset. Employing location-specific stay-at-home (S@H) mandates to proxy for COVID’s disrupting effects...

...Lucy Huajing Chen; Inder K. Khurana SUMMARY We find that U.S.-listed foreign firms using IFRS pay higher audit fees than those that report using U.S. GAAP. Additional analyses reveal that our key inference is not due to the differences in the demand for Big 4 auditors, familiarity with IFRS...

.... Consistent with this notion, we document that dismissed partners charge lower audit fees and deliver lower-quality audits to their current clients. This relationship is concentrated for instances when the dismissing client is more economically important to the audit partner. These results are robust...

... their shares to support their firms’ financing (business-pledging firms) or to increase their personal wealth (individual-pledging firms). Based on data from listed nonstate-owned Chinese firms, we find that auditors are less likely to issue modified audit opinions and more likely to charge lower audit fees...

... a new measure, distressed client auditing experience, we find consistent evidence that audit offices with more of such experience exhibit a reduced likelihood of both Type I and Type II GCO misclassifications. In addition, this type of auditor experience helps to reduce audit fees, likely through...

...Brian M. Burnett; Bjørn N. Jørgensen; Troy J. Pollard SUMMARY The U.S. SEC permits exemptions from U.S. domestic securities regulation for foreign-domiciled firms that qualify as foreign private issuers (FPIs). We study the impact on audit fees when foreign-domiciled firms lose or gain FPI status...

... and improve contract efficiency. Our evidence shows that cross-ownership is positively associated with higher borrower audit fees, our proxy for audit quality. We also find that the effect is more pronounced for larger loans. Overall, these results suggest that cross-owners view external audits to be a viable...

...Narendra Nath Kushwaha; Abhinav Anand; M. Jayadev; K. Raghunandan SUMMARY We examine the effect of related party transactions (RPTs) on audit fees in Indian public companies. RPTs can be used to manipulate financial statements or to transfer wealth between firms and their related parties...

... covenants. In examining audit effort implications for borrowers, we find that ACPs are associated with higher audit fees and longer audit report lags. This is consistent with auditors responding to the litigation risk ACPs impose. In samples where the risk of third-party litigation is greater...

... incremental information to the market nor impacts audit fees or quality. Non-U.S. studies have also reported inconsistent findings. For instance, using a balanced sample of premium listings of equity shares on the London Stock Exchange, Reid et al. (2019) report an improvement in financial reporting...

...Feiqi Huang; Tawei Wang; Ju-Chun Yen SUMMARY This study investigates whether audit clients’ blockchain activities (including crypto-related activities) affect audit risk by examining the association between blockchain disclosures in 10-K filings and audit fees. Focusing on U.S. firms between 2013...

.... We operationalize auditors’ perceptions of financial reporting risk with audit fees. ⁴ Prior research highlights the sensitivity of audit fees to auditee risk (see, e.g., Hay, Knechel, and Wong 2006 ). Auditor risk assessments directly influence the nature and extent of audit evidence...

... control, and contribute to evidence gathering and information sharing in the conduct of the audit. Using a large sample of Belgian private firms with data on employee training, we find that a one standard deviation increase in clients’ training cost (hours) reduces audit fees by approximately 3.4 percent...

...Dahlia Robinson; Thomas Smith; Stephanie Walton SUMMARY We examine whether audit engagements where the client has never switched auditors (original auditors) are associated with different audit fee and audit quality outcomes, relative to engagements that have experienced an auditor change. We...

..., and whether quality concerns are realized. Then, for non-pro bono audits, we calculate abnormal audit fees and examine their impact on audit quality. We find that pro bono audits are mainly supplied by Big 4 auditors to charities with greater public donations, a lower debt ratio...

... find that in industries with more complex accounting, clients of M&A expert auditors are less likely to experience M&A-related misstatements. In industries with less complex accounting, M&A experts pass audit fee savings to their clients during acquisition years. Additional analyses suggest...

... in recent years. We extend the traditional framework used to classify audit fee research by adding a novel structure that focuses on political, economic, social, technological, legal, and environmental/ecological factors (a PESTLE analysis). We provide a systematic review of the literature on external...

...Matthew J. Beck; Matthew Glendening; Chris E. Hogan SUMMARY We examine the consequences of firms' disaggregation choices for auditor effort and audited financial statements. We document a significant positive association between disaggregation and audit fees, our proxy for auditor effort. Using...

.... However, we also find that the reporting behavior of prior-auditor CFOs becomes more aggressive over time as the salience of their audit experience decays. Further, we find that audit fees are lower for clients with prior-auditor CFOs but increase as the CFOs' time away from auditing increases. Overall...