Library Header Image
LSE Research Online LSE Library Services

Are audit fees discounted in initial year audit engagements?

Barua, Abhijit, Lennox, Clive S. and Raghunandan, Aneesh ORCID: 0000-0003-0443-4984 (2020) Are audit fees discounted in initial year audit engagements? Journal of Accounting and Economics, 69 (2-3). ISSN 0165-4101

[img] Text (Are audit fees discount in initial year audit engagements?) - Accepted Version
Download (346kB)

Identification Number: 10.1016/j.jacceco.2019.101282


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:
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: 25 Jul 2024 06:42

Actions (login required)

View Item View Item


Downloads per month over past year

View more statistics