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This study examines the relationship between school ties among external auditors and audit committee members, and their joint impact on audit fee. We also examine how the monitoring and executive functions within companies moderate this relationship.

This study employs a regression analysis model on a sample of companies listed on the Indonesia Stock Exchange from 2016 to 2019, followed by additional analyses using high-low growth and tech samples, as well as robustness tests involving coarsened exact matching (CEM) and Heckman’s (1979) theory to address potential causality issues.

This study reveals that school ties between external auditors and audit committees positively influence audit fee. The audit committee size weakens this relationship, while the presence of an internal audit enhances it.

This research contributes to the literature related to the relationship between school ties and audit fee in Indonesian public companies, providing insights for stakeholders and informing company policies. It aims to increase awareness of the significance of school ties among Indonesian companies.

This research fills a knowledge gap by examining the link between audit committee-external auditor relationships and audit fees, aiming to generate new insights and empirical evidence to inform future research and regulatory decisions.

Despite the acknowledged significance of the relationship between audit fees and corporate philanthropic initiatives, the existing literature has not yet reached the desired level of providing explicit evidence on how this relationship can be moderated by board gender diversity. This paper aims to contribute to the ongoing debate by using a panel data set comprising 905 Chinese listed firms over a five-year period from 2015 to 2019.

To generate solid findings and overcome the potential endogeneity bias, various econometric estimators, namely, ordinary least squares, two-step generalized method of moments, robust two-stage least squares and subsample analysis, have been carefully used. More interestingly, the study’s results remain consistent across different estimation methods.

The results reveal a statistically significant positive link between audit fees and corporate charitable giving. More interestingly, this connection strengthens with a higher representation of women directors on the board, particularly when there are three or more female directors. Furthermore, the results suggest that nonstate-owned firms exhibit greater motivation to participate in charitable giving initiatives compared to state-owned counterparts.

Stakeholders from various groups should attentively recognize the importance of gender-diverse boards as a dynamic factor impacting the association between audit fees and corporate charitable giving.

To the best of the authors’ knowledge, the crushing majority of the preceding research has not delved deeply into the critical role of board gender diversity in the relationship between audit fees and corporate charitable donations. Hence, this study provides a profound understanding of how audit fees predict corporate philanthropic initiatives.

This study aims to examine the impact of client information technology (IT) capabilities on audit report lag and audit fees in Jordanian companies listed on the Amman Stock Exchange (ASE) during the COVID-19 pandemic.

This study analysed financial and non-financial data from 72 Jordanian public shareholding companies listed on the ASE between 2014 and 2021. Using fixed- and random-effects models, the authors examined the impact of client IT capabilities on audit report lag and audit fees. The authors also examined how the COVID-19 pandemic might affect audit report lag and audit fees. The analysis incorporated various control variables specific to the Jordanian context to ensure accuracy.

Empirical evidence indicates that client IT capabilities do not significantly impact audit report lag and audit fees. In contrast, the COVID-19 pandemic has positively impacted audit report lag and audit fees, leading to an increase in audit report lag of 60 to 67 days and an increase in audit fees of approximately 15%. It is worth noting that these effects are more pronounced when influenced by factors including return on assets, company losses and audits conducted by the Big 4 firms.

The scope of this study, which focuses on Jordanian firms, may limit the generalisability of the findings to other contexts. Reliance on aggregate IT infrastructure and software assets as proxies for IT capabilities might not fully capture their multifaceted nature, overlooking the qualitative aspects crucial for audit outcomes. Furthermore, excluding external factors such as governmental regulations underscores the need for future research to explore the nuanced interplay between IT capabilities, internal control systems and regulatory environments, enriching our understanding of audit practices.

This study contributes to auditing literature by examining the interplay between IT capabilities and audit processes during the COVID-19 pandemic in Jordan. This study highlights the unexpected finding that IT capabilities have minimal impact on audit report lags and fees, opening new avenues for research on how pandemics and similar crises can reshape auditing practices and influence regulatory policies in an evolving economic environment.

The purpose of this study is to examine the relation between product market competition and audit fees by using firm-level product market competition measures and mitigating the endogeneity issues.

This study uses 12,136 US firms from 2004 and 2019. To ensure the robustness of the main findings, this study uses three firm-level product market competition measures and import trade tariff rate reductions of the USA as a quasi-natural experiment. This study also performs three cross-sectional tests and validation tests.

This study demonstrates that there is a negative relation between product market competition and audit fees and establishes a causal relation. Moreover, it reveals that the findings become more pronounced when auditors possess industry-specific expertise, when client firms are younger, and when operating within more homogeneous industries. Additionally, a validation analysis supports the findings.

This study offers significant insights for regulators by highlighting how product market competition plays a constructive role in overseeing firm management.

The authors contribute to the existing literature by showing that there is a negative association between product market competition and audit fees after controlling external monitoring mechanisms. The authors also find the causal relation. These findings indicate that competitive pressures originating from product markets exert a significant influence on disciplining a client firm’s management.

The various factors influencing audit fees are still unclear, which may undermine the possibility of attaining fair audit pricing. Against this concern, this study aims to investigate the relationship between the auditee’s corporate characteristics and audit fees. In addition, it reveals if accounting comparability, as a proxy for financial reporting quality, mediates such a relationship by bringing evidence from an emerging market.

This study depends on data from nonfinancial companies listed on the Egyptian stock exchange from 2016 to 2019. It adopts multiple regression models to test the impact of corporate characteristics and accounting comparability on audit fees and uses path analysis to test the indirect effect of the audit clients’ characteristics on audit fees through accounting comparability.

The authors found a significant positive (negative) effect of firm profitability on audit fees (accounting comparability). Further, accounting comparability has a significant negative effect on audit fees. The authors also found that accounting comparability partially mediates the significant relationship between profitability and audit fees. However, the authors found no significant association between leverage and audit fees. Finally, the authors found that accounting comparability does not mediate the relationship between leverage and audit fees.

This study’s findings can benefit audit practitioners in Egypt by showing the main factors affecting audit fees, especially audit clients’ attributes. The current findings also guide professional bodies responsible for issuing accounting and audit standards regarding the importance of financial reporting quality for audit pricing decisions.

This study contributes to the literature by examining the mediating effect of accounting comparability concerning the corporate characteristics-audit fees relationship in developing African countries such as Egypt. This study’s findings can benefit audit practitioners in Egypt by showing the main factors affecting audit fees, especially audit clients’ attributes. The current findings also guide professional bodies responsible for issuing accounting and audit standards regarding the importance of financial reporting quality for audit pricing decisions.

This study aims to examine the relationship between climate change disclosure performance (CCDP) and audit pricing. The moderating effect of corporate governance characteristics on that relationship is also investigated.

Using a sample of top 300 Australian Securities Exchange listed non-financial firms over the period 2008–2019, this study investigates the association between CCDP and audit fees. The findings are robust to a difference-in-difference test thereby alleviating potential endogeneity concerns.

CCDP is found to be significantly positively related to external auditor fees.

The findings show some important implications for firm management, regulators, investors and auditors. This study presents empirical evidence that climate change, as a factor of external risk, influences audit fees.

Firms with governance structures characterized by larger more independent boards, larger audit committees and audit committees with a higher level of independence significantly moderate the relationship between CCDP and audit fees.

Investors’ demand for firm transparency and disclosure of information regarding the risks of climate change, effects and opportunities has increased significantly over the past decade, as these factors could have a significant effect on valuation and investment decisions.

Importantly, stakeholders need to be aware of the costs of climate change, the quantification of climate change impacts and how firms address climate change in their business risk management processes. This study quantifies the impact of CCDP on auditor risk assessments via audit fees.

This study aims to examine how female directors on corporate boards and audit committees, and auditor affiliations (Big 4 versus Egyptian firms affiliated with foreign auditors), influence audit fees. This examination is driven by the global call for increased female representation in leadership roles and its potential implications for audit quality and financial transparency.

A sample of non-financial companies listed on the Egyptian Stock Exchange is used for the period 2011–2020. The authors used multivariate regression models, the Heckman two-stage and tokenism to support the analysis.

The results are threefold. First, this analysis reveals that female directors, whether on corporate boards or audit committees, are more likely to choose higher-quality audits in the form of high audit fees. Second, both Big 4 firms and Egyptian audit firms affiliated with foreign auditors are positively associated with audit fees and earn significant audit fee premiums. Third, a minor difference in audit fee premiums could be attributed to the existence of female directors.

Future research may expand the analysis performed in this study by investigating the characteristics related to female directors (e.g. education, experience and age) on audit fees.

This study suggests insights for regulatory bodies, corporate decision-makers, auditors and corporate governance researchers. For instance, this study reveals that the Big 4 are not homogenous and provide different audit quality levels along with significant audit fee premiums.

This study extends and contributes to the growing literature on female representation in corporate leadership. First, this study adds to the limited research in Egypt by examining the effect of female board representation on audit quality. Second, this study adds to the extant literature on the gender of financial experts by demonstrating that female financial expert is more likely to demand high-quality audits. Finally, the results have significant implications for policymakers. For instance, this study reveals that the Big 4 are not homogenous and provide different audit quality levels along with significant audit fee premiums.

This paper aims to examine how a firm’s exposure to economic policy uncertainty affects the auditors’ perceptions of financial reporting risk. Firms that are more sensitive to policy uncertainty are predicted to engage in more earnings management because these firms are more likely to experience greater uncertainty in future operations. Audit fees will reflect this reporting risk. On the other hand, auditors might feel more fee pressure from policy-sensitive firms because firms are more inclined to reduce spending in the face of uncertainty and subsequently charge lower fees.

The author tests my hypothesis using U.S. data on audit fees and client characteristics of public companies between the years 2001 and 2021. The author estimates a standard audit fee model based on the audit fee literature (Hay et al., 2006) while also including the two policy sensitivity measures. This study uses panel data methods that allow time-series analyses, providing a powerful setting to test dynamic audit fee adjustment to improve the understanding of the audit market.

The results suggest that audit fee is higher for policy-sensitive firms than for policy-neutral firms. These results are robust to various proxies of policy sensitivity and various specifications designed to mitigate the endogeneity concerns. The study provides assurance that on average, auditor pricing reflects client risk adequately, mitigating the concern that auditors give in to fee pressure and compromise audit quality as a result.

While the findings from this study should be of value to regulators and academics seeking to understand audit activities amid escalating macroeconomic uncertainty, when interpreting these results, several limitations must be considered. The study does not examine how external auditors evaluate risks tied to policy uncertainty. A comprehensive understanding of how and why external auditors respond to heightened policy uncertainty faced by firms could be better achieved through interviews with external auditors and audit committee members. In addition, while this study posits that auditors adjust their approach in response to changes in policy uncertainty, largely due to potential shifts in the risks of material misstatement, there might be additional factors at play that warrant higher audit fees post a change in policy uncertainty. For instance, specific policy changes may give rise to new risks or modify existing ones, thereby precipitating increased scrutiny of records and procedures as company directors’ demand. These aspects offer potential avenues for future research.

This study underscores the significant role of policy sensitivity in determining audit fees and audit quality. Policy-sensitive firms present unique complexities and potential risks that require additional effort and vigilance from auditors. Auditors must develop a specialized understanding of sectors prone to policy fluctuations to navigate these unique challenges effectively. In addition, the role of professional standards boards and regulators in establishing guidelines for auditing policy-sensitive firms cannot be understated. Such guidelines could lead to more consistent audit practices and improved audit quality. Finally, by recognizing and effectively responding to the policy sensitivity of client firms, audit firms can mitigate their own risks, strengthen public trust and enhance the reliability of financial reports.

First, this study adds to an emerging stream of auditing literature that focuses on how audit fees interact with a firm’s external environment by providing evidence of an unexplored implication, a firm-specific policy sensitivity. Second, my main construct, policy sensitivity, provides two distinct advantages over other variables used in prior studies that explore the relationship between audit fees and external firm environments. Third, this study answers the calls for research by De Villiers et al. (2013, p. 3), who identified the cost behavior of audit fees, especially over time, as an area not well understood.

This study aims to examine whether firms that appear to exhibit high sustainable outputs are more likely to pay higher audit fees than firms without such outputs.

The sustainability outputs are measured using a sustainable product portfolio consisting of four products: clean energy products, eco-design products (EDP), environmental products (EP) and sustainable building projects (SBP). The audit fee variable is measured by the natural logarithm of the total amount of audit fees. The study tests two models of the association between these outputs and audit fees; Model 1 tests this association in the absence of the moderating variable (sustainability committee), and Model 2 tests the association in the presence of the moderating variable.

An analysis of data on 261 European firms from the Refinitiv Eikon database from 2010 to 2019 shows that high sustainability outputs are significantly and positively associated with audit fees. More importantly, this association is moderated by the presence of a board-level sustainability committee, suggesting that this type of committee reflects a factor considered by auditors in their audit risk assessment practices. The findings indicate that in Model 1, one (EP) out of four variables has a significant and positive association with audit fees, while in Model 2 and in the presence of sustainability committee, two variables (EP and EDP) have a significant and negative association with audit fees. However, the robust analysis shows that three variables (EP, EDP and SBP) have significant and negative associations with audit fees.

The study findings have important implications for policymakers, auditors and firms’ managers. For policymakers, the findings provide support for the argument that sustainable attitudes incentivise firms to manage sustainable product profiles more effectively. As such, policymakers should incentivise firms to establish a sustainability committee and regulate its role and responsibilities. Auditors should coordinate with the sustainability committee to facilitate audit efforts and reduce audit fees.

Understanding the relationship between sustainable products and audit fees will allow firms to improve their portfolio of sustainable products. In addition, other social implications of this study relate to improving relationships with society by establishing a sustainability committee that is responsible to communicate with that society.

The results support the argument that firms should manage sustainable product portfolios more effectively. In addition, the results of the study highlight the importance of a new variable as a moderator, the sustainability committee, which has not been examined before.

Prior research finds evidence that audit quality is positively associated with the joint purchase of tax nonaudit services (NAS) and concludes that jointly provided tax services result in audit-related knowledge spillovers that lead to improved audit quality. We extend this line of research. We examine the relation between auditor-provided tax services and restatements and determine whether this relation differs when the auditor is a small or large accounting firm. We also examine whether the Securities Exchange Commission’s restrictions on certain tax consulting practices (SEC, 2006) altered this relation. Specifically, we measure whether the probability of financial statement restatements varies with (1) variation in accounting firm size (measured as PCAOB annually inspected firms versus PCAOB triennially inspected firms), and (2) the joint provision of audit and tax services. We find a negative relation between auditor-provided tax services and restatements which is consistent with prior research. We also find that this relation is significantly more negative when the auditor is a small accounting firm. Finally, we find that the lower probability of a restatement associated with the joint provision of audit and tax services persists regardless of auditor size after the SEC-imposed restrictions on certain tax consulting services in 2006. Our study provides evidence that accounting firms, and particularly small accounting firms, benefit from knowledge spillovers when jointly providing audit and tax services and these benefits lead to improved audit quality. Prior research concludes that large auditors provide higher audit quality and that the provision of tax services improves audit quality. Our results provide evidence that audit quality improvements are greater for small auditors and their clients. This improvement narrows that audit quality gap between large and small auditors. We do not find evidence that the SEC’s restrictions on certain tax consulting services altered the relation between audit quality and tax services.