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Sticky audit fees: Empirical evidence and implications

Project Member(s): Shan, Y.

Funding or Partner Organisation: Accounting and Finance Association of Australia and New Zealand (Accounting & Finance Association of Australia and New Zealand - Research Grants)

Start year: 2015

Summary: The extant audit literature implicitly assumes that audit fees change without pricing friction following changes in client and audit firm characteristics. However, the economics literature recognizes that prices can be sticky when markets are characterized by imperfect competition and imperfect information. This project aims to connect the audit literature with the economics literature, and investigate the sticky behaviour of audit fee and its implications. The results are expected to provide regulatory implications to global regulators and standard setters with respect to improving the quality of audit service and audit market competition.

Keywords: Audit fee; Stickiness

FOR Codes: Auditing and Accountability, Professional, Scientific and Technical Services