THE DETERMINANTS OF AUDIT FEES: SOME EMPIRICAL MODELS

G. Whittington; Chris Pong

doi:10.1111/jbfa.1994.21.issue-8

THE DETERMINANTS OF AUDIT FEES: SOME EMPIRICAL MODELS

G. Whittington, Chris Pong

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121 Citations (Scopus)

Abstract

This paper proposes a model of audit fee determination based upon size and other characteristics of the auditee and the auditor, and upon whether there has been a recent change of auditor (which might lead to a low-balling effect). A novel feature of the model is that auditee size is measured in two dimensions, sales and assets, and is allowed to have a quadratic relationship with audit fee. The model was estimated for a sample of large listed UK companies for the years 1981 to 1988. The results support the low-balling hypothesis and also provide insights into the distinctive role of the Big 8 firms in the audit market.

Original language	English
Pages (from-to)	1071-1095
Journal	Journal of Business Finance and Accounting
Volume	21
Issue number	8
DOIs	https://doi.org/10.1111/jbfa.1994.21.issue-8
Publication status	Published - 1 Dec 1994

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abstract = "This paper proposes a model of audit fee determination based upon size and other characteristics of the auditee and the auditor, and upon whether there has been a recent change of auditor (which might lead to a low-balling effect). A novel feature of the model is that auditee size is measured in two dimensions, sales and assets, and is allowed to have a quadratic relationship with audit fee. The model was estimated for a sample of large listed UK companies for the years 1981 to 1988. The results support the low-balling hypothesis and also provide insights into the distinctive role of the Big 8 firms in the audit market.",

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THE DETERMINANTS OF AUDIT FEES: SOME EMPIRICAL MODELS

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