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Are audit fees discounted in initial year audit engagements?

Barua, Abhijit, Lennox, Clive S. and Raghunandan, Aneesh (2019) Are audit fees discounted in initial year audit engagements? Journal of Accounting and Economics. ISSN 0165-4101

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Identification Number: 10.1016/j.jacceco.2019.101282

Abstract

Many studies report that audit fees are discounted in the year of an auditor change and regulators have long been concerned that such fee discounting could impair audit quality. We find significant bias in the way studies have tested for fee discounting. The bias exists because interim procedures are usually performed by both the predecessor and successor auditors but only the successor’s fee needs to be disclosed. Accordingly, the disclosed fee during the auditor change year usually relates to a partial year of auditing services. We find that the evidence for fee discounting disappears after correcting for this measurement bias.

Item Type: Article
Official URL: https://www.sciencedirect.com/journal/journal-of-a...
Additional Information: © 2019 Elsevier B.V.
Divisions: Accounting
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HB Economic Theory
Date Deposited: 29 Nov 2019 08:54
Last Modified: 30 May 2020 23:11
URI: http://eprints.lse.ac.uk/id/eprint/102683

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