Auditors' Response to Auditor Business Risk: An Analysis Using Public and Private Companies
- Authors
- Bae, Gil Soo; Choi, Seung Uk; Lee, Jae Eun
- Issue Date
- 11월-2021
- Publisher
- AMER ACCOUNTING ASSOC
- Keywords
- auditor business risk; public and private companies; risk premiums; hourly audit fees
- Citation
- AUDITING-A JOURNAL OF PRACTICE & THEORY, v.40, no.4, pp.27 - 51
- Indexed
- SSCI
SCOPUS
- Journal Title
- AUDITING-A JOURNAL OF PRACTICE & THEORY
- Volume
- 40
- Number
- 4
- Start Page
- 27
- End Page
- 51
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/135852
- DOI
- 10.2308/AJPT-19-102
- ISSN
- 0278-0380
- Abstract
- Using audit hours and hourly audit fees for a large sample of public and private companies, we examine how auditors respond to auditor business risk. We find that auditors work more hours and charge higher hourly fees when auditing public companies than when auditing private companies. A difference-in-differences time-series comparison of the pre- and post-initial public offering (IPO) periods also indicates that both audit hours and hourly audit fees are higher for the post-IPO period than for the pre-IPO period of the company. This suggests that auditors respond to an increase in auditor business risk by increasing audit effort and charging a risk premium for the residual risk that additional effort alone does not fully address.
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Collections - Korea University Business School > Department of Business Administration > 1. Journal Articles
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