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Public equity and audit pricing in the U.S.

Jorgensen, Bjorn N., Badertscher, Brad, Katz, Sharon and Kinney, William (2013) Public equity and audit pricing in the U.S. Working papers series, The University of Texas at Austin, Texas, USA.

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Abstract

Does audit pricing of U.S. firms with publicly traded equity differ from pricing of otherwise similar, firms with private equity?. The answer is potentially important for evaluating for regulatory regime design efficiency and for understanding audit demand and production economics. For U.S. firms with publicly- traded debt, we hold constant the regulatory regime, including issuer reporting mandates as well as auditor responsibilities and practices. We thus vary equity, ownership factors and public securities market factors plus any related de facto litigation risk and audit demand. In cross-section, we find that audit fees for public equity firms 12% to 25% higher than fees for similar private equity firms. Time-series comparisons for firms that change owners hip status yield larger percentage fee increases (decreases) for those going public (private). Results are consistent with substantial incremental audit fees arising from higher auditor litigation risk associated with public equity ownership.

Item Type: Monograph (Working Paper)
Official URL: http://www.utexas.edu/
Additional Information: © 2013 The Author(s)
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HM Sociology
Journal of Economic Literature Classification System: M - Business Administration and Business Economics; Marketing; Accounting > M4 - Accounting and Auditing > M41 - Accounting
M - Business Administration and Business Economics; Marketing; Accounting > M4 - Accounting and Auditing > M42 - Auditing
Sets: Departments > Accounting
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 05 Aug 2013 10:41
URL: http://eprints.lse.ac.uk/51388/

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