“…The prior literature suggests an audit fee discount for an initial audit engagement Simon & Francis, 1988;Whisenant, Sankaraguruswamy, & Raghunandan, 2003), so we include an indicator of initial audit engagement (INITIAL) and control for the number of new audit partners engaged (NEWCPA). Similar to Huang, Liu, Raghunandan, andRama (2007, 2009) and Chen, Sun, and Wu (2010), we include the logarithm of non-audit fees (LNNAF), the ratio of the audited client's total assets over the sum of the total assets of all the audit firm's clients (CIFIRM), the ratio of the audited client's total assets over the sum of the total assets of all the leading audit partner's clients (CICPA1) and the accompanying audit partner's clients (CICPA2), the number of years of audit firm tenure since 1983 (AFTENURE), and the number of continuous years that the leading audit partner and the accompanying audit partner have been engaged with the client (CPA1TE-NURE and CPA2TENURE) to capture client importance and the client-auditor relationship. We also control for audit firm's and auditor's industry specialization (EXPERT_FIRM, EXPERT_CPA1 and EXPERT_CPA2) given the audit fees premiums for industry specialized documented in the prior literature (Francis, Reichelt, & Wang, 2005;Zerni, 2012).…”