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- Title
On the persistence and dynamics of Big 4 real audit fees: Evidence from the UK.
- Authors
Kacer, Marek; Peel, David A.; Peel, Michael J.; Wilson, Nicholas
- Abstract
Abstract: Despite the huge audit pricing literature, there is a dearth of evidence on the temporal dynamics of audit fee adjustments and the persistence of audit fees. Based on a sample of 76,867 panel observations for a sample of UK companies audited by the Big 4 over the period 1998 to 2012, we employ consistent lagged dependent variable panel estimators to provide new evidence on the persistence and dynamics of real Big 4 audit fees. Contrary to extant research, which assumes that audit fees adjust immediately in a single period, our empirical results indicate that Big 4 real audit fees are persistent, being partly dependent on their previous realisations. We conclude that static audit fee models omit a potentially important temporal dimension of audit pricing behaviour and that further research is warranted into dynamic audit fee models across other jurisdictions.
- Subjects
ADMINISTRATIVE fees; AUDITING of corporations; INTERNAL auditing; PROFESSIONAL fees; CONTROL self-assessment (Auditing)
- Publication
Journal of Business Finance & Accounting, 2018, Vol 45, Issue 5/6, p714
- ISSN
0306-686X
- Publication type
Article
- DOI
10.1111/jbfa.12310