Audit fee lowballing: Determinants, recovery, and future audit quality
DC Field | Value | Language |
---|---|---|
dc.contributor.author | Cho, Myojung | - |
dc.contributor.author | Kwon, Soo Young | - |
dc.contributor.author | Krishnan, Gopal, V | - |
dc.date.accessioned | 2022-02-28T10:41:44Z | - |
dc.date.available | 2022-02-28T10:41:44Z | - |
dc.date.created | 2022-01-20 | - |
dc.date.issued | 2021-07 | - |
dc.identifier.issn | 0278-4254 | - |
dc.identifier.uri | https://scholar.korea.ac.kr/handle/2021.sw.korea/137243 | - |
dc.description.abstract | Prior research on the link between lowballing (LB) of audit fees and audit quality is incon-clusive. Using more recent data and an innovative design, we define LB engagements as those where the audit fee discount is at least 30 percent. We consider three research ques-tions to understand the possible link between LB and audit quality. First, we investigate whether the two variables that are often associated with auditor independence in the literature-non-audit fees and client importance-are related to LB. Second, we test whether lowballing auditors recoup initial audit fee discounts in the future period. Lastly, we investigate the relation between recovery of audit fees and future audit quality. We find that non-audit fees in the first year of engagement are negatively related to the propensity to LB. LB is significantly positively related to client importance for client firms switching from a non-Big N to another non-Big N auditor while the relation is insignificant for client firms switching from a Big N to another Big N auditor. The results of non-audit fees and client importance indicate that economic dependence does not motivate audit firms to lowball. Further, lowballing auditors tend to recoup their initial fee discounts in subsequent periods via increases in audit fees. Using multiple measures of audit quality, we do not find a significant relation between recovery of audit fees and future audit qual-ity. Overall, contrary to regulators' concerns, our results suggest that LB does not impair audit quality. (c) 2020 Elsevier Inc. All rights reserved. | - |
dc.language | English | - |
dc.language.iso | en | - |
dc.publisher | ELSEVIER SCIENCE INC | - |
dc.subject | CLIENT IMPORTANCE | - |
dc.subject | INDUSTRY SPECIALIZATION | - |
dc.subject | JOINT DETERMINATION | - |
dc.subject | NONAUDIT SERVICES | - |
dc.subject | LITIGATION RISK | - |
dc.subject | FIRM TENURE | - |
dc.subject | INDEPENDENCE | - |
dc.subject | ENGAGEMENTS | - |
dc.subject | OFFICE | - |
dc.subject | IMPACT | - |
dc.title | Audit fee lowballing: Determinants, recovery, and future audit quality | - |
dc.type | Article | - |
dc.contributor.affiliatedAuthor | Kwon, Soo Young | - |
dc.identifier.doi | 10.1016/j.jaccpubpol.2020.106787 | - |
dc.identifier.scopusid | 2-s2.0-85094837574 | - |
dc.identifier.wosid | 000700559900003 | - |
dc.identifier.bibliographicCitation | JOURNAL OF ACCOUNTING AND PUBLIC POLICY, v.40, no.4 | - |
dc.relation.isPartOf | JOURNAL OF ACCOUNTING AND PUBLIC POLICY | - |
dc.citation.title | JOURNAL OF ACCOUNTING AND PUBLIC POLICY | - |
dc.citation.volume | 40 | - |
dc.citation.number | 4 | - |
dc.type.rims | ART | - |
dc.type.docType | Article | - |
dc.description.journalClass | 1 | - |
dc.description.journalRegisteredClass | ssci | - |
dc.description.journalRegisteredClass | scopus | - |
dc.relation.journalResearchArea | Business & Economics | - |
dc.relation.journalResearchArea | Public Administration | - |
dc.relation.journalWebOfScienceCategory | Business, Finance | - |
dc.relation.journalWebOfScienceCategory | Public Administration | - |
dc.subject.keywordPlus | CLIENT IMPORTANCE | - |
dc.subject.keywordPlus | ENGAGEMENTS | - |
dc.subject.keywordPlus | FIRM TENURE | - |
dc.subject.keywordPlus | IMPACT | - |
dc.subject.keywordPlus | INDEPENDENCE | - |
dc.subject.keywordPlus | INDUSTRY SPECIALIZATION | - |
dc.subject.keywordPlus | JOINT DETERMINATION | - |
dc.subject.keywordPlus | LITIGATION RISK | - |
dc.subject.keywordPlus | NONAUDIT SERVICES | - |
dc.subject.keywordPlus | OFFICE | - |
dc.subject.keywordAuthor | Audit fees | - |
dc.subject.keywordAuthor | Audit quality | - |
dc.subject.keywordAuthor | Client importance | - |
dc.subject.keywordAuthor | Fee recovery | - |
dc.subject.keywordAuthor | Lowballing | - |
dc.subject.keywordAuthor | Non-audit fees | - |
Items in ScholarWorks are protected by copyright, with all rights reserved, unless otherwise indicated.
(02841) 서울특별시 성북구 안암로 14502-3290-1114
COPYRIGHT © 2021 Korea University. All Rights Reserved.
Certain data included herein are derived from the © Web of Science of Clarivate Analytics. All rights reserved.
You may not copy or re-distribute this material in whole or in part without the prior written consent of Clarivate Analytics.