Audit fee stickiness

Show simple item record De Villiers, Charl Johannes Hay, David Zhang, Zhizi (Janice) 2014-02-24T07:04:59Z 2014-02-24T07:04:59Z 2014
dc.description.abstract 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. en_US
dc.description.librarian hb2014 en_US
dc.description.uri en_US
dc.identifier.citation De Villiers, CJ, Hay, D & Zhang, Z 2014, 'Audit fee stickiness', Managerial Auditing Journal, vol. 29, no.1, pp. 2-26. en_US
dc.identifier.issn 0268-6902 (print)
dc.identifier.issn 1758-7735 (online)
dc.identifier.other 10.1108/MAJ-08-2013-0915
dc.language.iso en en_US
dc.publisher Emerald en_US
dc.rights © Emerald Group Publishing Limited en_US
dc.subject Competition en_US
dc.subject Audit fees en_US
dc.subject Audit services market en_US
dc.subject Cost stickiness en_US
dc.subject Price behaviour en_US
dc.title Audit fee stickiness en_US
dc.type Postprint Article en_US

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