What is it going to cost? Empirical evidence from a systematic literature review of audit fee determinants

Abstract

The audit market is subject to ongoing regulation to ensure or improve the quality of audit services. For this reason, international research on the audit market is highly popular. As part of this discussion, pricing is considered one of the most relevant aspects of audits. However, a remarkable heterogeneity of the control variables used in empirical studies can be observed. Prior meta-analyses on audit fees already summarized and categorized them for audit fee studies covering financial periods until fiscal year 2007. We contribute to the international literature with an up-to date and systematic review approach on audit fee studies published in international relevant scientific journals (JQ3 A + , A, B). In addition to prior reviews and meta-analyses, we finally suggest a standard model for the most important fee drivers that can be used for future audit fee studies. Our unique approach is based on an EBSCO keyword search with a sample of 385 papers published in international relevant scientific journals (JQ3 A + , A, B) and is using a scoring model to assess significance of audit fee control variables. On the one hand, we enrich the literature by a new state of the art paper on pricing within audit firms. On the other hand, we contribute to the international literature on audit markets from a theoretical point of view by deriving a new testable model of audit fee determinants. Therefore, our empirical results provide several fundamental insights that can be used for further empirical and theoretical research on the pricing of audit services. Thus, the results are meaningful not only for researchers within the field of auditing but also for experts in management, pricing or European legislature.

Ownership structure and audit fees: Evidence from Sub-Saharan Africa

“…Accordingly, this study addresses the concern raised by Liang et al (2020) by examining the influence of ownership structure on audit fees. Furthermore, most studies examining factors affecting audit fees are based in the developed countries (Lobanova et al, 2020;Shan et al, 2019;Widmann et al, 2020) that have relatively advanced good governance practices and institutional environments. However, Waweru, (2020) argues that because of prevailing differences in institutional environments between developed and developing countries, findings of studies in the developed countries might not capture the situation in developing countries.…”

Mobile-Health based physical activities co-production policies towards cardiovascular diseases prevention: findings from a mixed-method systematic review

“…A last limitation concerns the internal coding we adopted in the double-blind scoring of the assessment of abstracts for the inclusion of documents for the conceptual analysis. Although based on a rigorous scoring process (extracted by the adaptation of previous research [ 59 , 60 ] and agreeing upon common grading rules [ 61 , 62 ]), this method is, in some sense, original and designed for our research aims; thus, it has not been tested in any previous research.…”

“…For the selection, particularly, we constructed an evaluation framework of all the selected abstracts as a type of applied active research [ 57 ], starting from the text analysis [ 58 ]. The text analysis of the abstracts was run by two different evaluators providing double-blind scoring (adapted from [ 59 , 60 ]) about aspects deductively and logically identified on the four main themes of the research: (i) CVD, (ii) physical activities, (iii) m-health, and (iv) co-production. The two evaluators scored, separately, all the documents, giving, for each theme, a score from 1 (low adherence) to 5 (high adherence), according to the relevance of the presence of the evaluated thematic within the abstract [ 61 , 62 ].…”

On the Political Decision of Audit Market Regulation: Empirical Evidence of Audit Firm Tenure and Maximum Durations within the European Union

“…One approach to reduce the conflicts of interest discussed in the literature is the legal obligation of auditor rotation, which is intended to prevent a coalition of interests between management and the auditor at the expense of the owners, which could result from a longterm contract (on auditor independence, see DeAngelo 1981). Since Chung and Lindsay (1988), auditor tenure has become an important topic within international audit research, for example, concerning a determinant for audit pricing (e.g., Simon and Francis 1988;Tanyi and Litt 2017;Ettredge et al 2018;Widmann et al 2021) or the question of auditor's independence (e.g., Marten 1994).…”

“…On the part of the audit firm, there is a moral hazard for the client that the audit fees will increase after the first period (Herzig and Watrin 1995). Setting the fee for the entire duration of the mandate also appears impracticable, as many cost components are subject to external influences that appear difficult to calculate for a longer period (on the determinants of audit fees, see Widmann et al 2021). Moreover, it is obvious that a legal rotation with a fixed mandatory duration creates another moral hazard problem regarding the efforts of the auditor.…”