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Open Access
Article
Publication date: 25 October 2022

Esraa Esam Alharasis, Manal Alidarous and Fouad Jamaani

This study aims to examine the relationship between auditor industry specialization (IS) and audit fees.

Abstract

Purpose

This study aims to examine the relationship between auditor industry specialization (IS) and audit fees.

Design/methodology/approach

The authors utilize 2,100 firm-year data of Jordanian companies from 2005 to 2018. Two conflicting theoretical approaches of IS were employed: the product differentiation approach, as assessed by market share (MS); and the shared efficiency approach, as evaluated by portfolio share (PS).

Findings

Results of the ordinary least squares (OLS) regression support product differentiation (shared efficiency) and show that employing experts' auditors exerts a very substantial and favorable direct impact on audit fees (negative).

Originality/value

This research contributes new empirical data to the auditing literature by examining if IS does influence Jordanian businesses' audit fees. The findings offer useful data for Jordanian officials to examine the auditing industry's difficulties while refining regulations and revising auditor pricing. Additionally, the results offer advice to Jordan's regulatory bodies who oversee the auditing industry. Arguably, results from Jordan may be extrapolated to other Middle Eastern nations.

Details

Asian Journal of Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2443-4175

Keywords

Article
Publication date: 28 October 2022

Songsheng Chen, Michel Magnan, Zhili Tian and Li Yao

This paper aims to investigate the effect of prior years’ audit adjustments, a proxy for auditors’ private information regarding the persistence of their clients’ audit…

Abstract

Purpose

This paper aims to investigate the effect of prior years’ audit adjustments, a proxy for auditors’ private information regarding the persistence of their clients’ audit risk, on audit pricing in the current year.

Design/methodology/approach

The authors use unique data sets of audit adjustments and audit fieldwork days from China, and a regression approach, to test their hypothesis.

Findings

The authors find that larger previous audit adjustments are associated with higher current-year audit fees, which is partially attributed to increased audit effort. The authors further document that the results are more pronounced when audit adjustments are consistently made in the same direction or more recent; in these cases, a larger percentage of the total effect is also attributable to the risk premium, instead of audit effort. Finally, the authors find that the effect of previous audit adjustments on current-year audit fees is stronger for firms with younger chief executive officers and specialist auditors.

Originality/value

To the authors’ best knowledge, they are the first to test the implication of auditors’ private information in setting audit fees. In addition to demonstrating that audit fees consist of a risk premium and a component to cover related costs, the authors further show variations in the relative importance between costs and risk premium under various contexts.

Details

Managerial Auditing Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 13 June 2008

Faten Sabry and Winai Wongsurawat

The purpose of this paper is to describe data assembled on all registered US investment companies on advisory fees using the NSAR filings and to analyze the impact of the…

Abstract

Purpose

The purpose of this paper is to describe data assembled on all registered US investment companies on advisory fees using the NSAR filings and to analyze the impact of the structure of the advisory contracts on the fees paid to mutual funds advisors. This analysis is particularly relevant now that mutual funds have to explain the rationale for the choice of the advisory fees in their public filings.

Design/methodology/approach

The paper summarizes data on advisory fees in the NSAR filings and uses regression analysis to examine the determinants of advisory fees.

Findings

The paper summarizes salient features of the mutual fund advisory fee contracts using the NSAR database. The analysis shows that breakpoint fee schedules designed to generate savings, do not automatically translate into lower expenses for the investors.

Practical implications

When determining the renewal of an advisory contract, the board of trustees of a mutual fund will then need to assess myriad factors related to the costs and profits of the fund, including the nature of the fee schedule. Regression models provide objective measures of assessing the reasonableness of advisory fees.

Originality/value

This paper contributes to the ongoing debate on the evaluation of mutual funds advisory fees and highlights the usefulness of the NSAR filings. The debate is especially relevant given the additional SEC disclosure requirements.

Details

Journal of Investment Compliance, vol. 9 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 1 January 1990

Pete Giacoma

User fees are charges levied against individual consumers of publicly produced services and commodities and publicly granted privileges on a cost‐per‐unit basis. In the…

Abstract

User fees are charges levied against individual consumers of publicly produced services and commodities and publicly granted privileges on a cost‐per‐unit basis. In the broadest definition, user fees include charges for specialized database searches performed by public libraries, for electricity produced by a city‐owned utility, and for liquor licenses. In each of these cases, an individual can avoid the charge by consuming zero amount of the service, commodity, or privilege. By comparison, an individual cannot avoid the general taxes assessed for support of the library or other government services even if his or her direct consumption of a given service is zero.

Details

The Bottom Line, vol. 3 no. 1
Type: Research Article
ISSN: 0888-045X

Article
Publication date: 1 February 2000

JOHN G. PERRY and MARTIN BARNES

Target cost contracts are growing in popularity but concerns remain about the interplay between fee, target, sharing ratios and the final price. This paper offers a…

Abstract

Target cost contracts are growing in popularity but concerns remain about the interplay between fee, target, sharing ratios and the final price. This paper offers a fundamental analysis of the principles under‐pinning target contracts. It shows that there is scope for manipulation of tenders and that suboptimal methods of tender evaluation are in use. The paper analyses both fixed fee and percentage fee contracts. Methods of tender evaluation are proposed that will both reduce the scope for manipulation by tenderers and increase the likelihood of the contract being awarded to the tenderer whose final price will be the lowest. The analysis reveals a strong case for setting the contractor's share of cost overrun or underrun at a value that is not less than 50%. Finally, the paper proposes two simplifications that would reduce the number of variables in target cost contracts of the future. One is for the employer to set the fee and the other requires only that a target be tendered but with the fee built into it.

Details

Engineering, Construction and Architectural Management, vol. 7 no. 2
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 1 February 1976

ROSS I. HARROLD

This article considers the use of charging differential fees for the same tuition services as a means to widen the financial accessibility of non‐government schools to…

Abstract

This article considers the use of charging differential fees for the same tuition services as a means to widen the financial accessibility of non‐government schools to children of less affluent parents in Australia. After discussing theoretical aspects, the author considers how the theoretical concepts could be operationalized, then how a sliding scale fee schedule could be implemented without, and with, external financial assistance.

Details

Journal of Educational Administration, vol. 14 no. 2
Type: Research Article
ISSN: 0957-8234

Open Access
Article
Publication date: 14 September 2022

Chinedu Francis Egbunike, Ikponmwosa Michael Igbinovia, Kenebechukwu Jane Okafor and Lucy Cecilia Mmadubuobi

The study investigated the relationship between residual audit fee and real income smoothening, proxied as real operating cash flow and production expenditure smoothing of…

Abstract

Purpose

The study investigated the relationship between residual audit fee and real income smoothening, proxied as real operating cash flow and production expenditure smoothing of non-financial firms in Nigeria.

Design/methodology/approach

The study relied on secondary data from annual financial statements of 75 firms in the non-financial sector from 2010 to 2019. The study estimated the residual audit fee using a modified model from several contexts to suit the Nigerian environment. The hypotheses were tested using the dynamic panel GMM estimation procedure.

Findings

The results showed a significant negative effect of residual audit fee on (real) operating cash flow smoothing and production expenditure smoothing of non-financial firms. The control variables showed mixed effects for the industry-related (firm size and profitability), auditor attribute (audit quality and audit report lag) and the board related (board size and board independence).

Research limitations/implications

The firms included in the analysis were selected based on data availability from MachameRatios® and the occurrence of missing values for some of the variables used in the various estimation models may bias results.

Practical implications

The study identifies the nexus between RAF and real earnings management practices of non-financial firms; and shows the implication of fee payment to the overall conduct of the audit. More so, the mixed findings from the CVs suggest that in the context of developing economies, shareholders and capital markets regulators should be watchful of residual audit fees and utilise it as a gauge for audit quality and also an indicator of opportunism and weak internal control in the firm in the future assessments.

Social implications

The implication of the study stems from its relevance to the capital market stability and the potential negative disastrous effect of corporate failure from earnings management practices.

Originality/value

The study develops a newly residual audit fee model to explore the effect of RAF on real income smoothing rather than the widely used models from prior literature; secondly, the focus on real activities manipulation may present additional evidence that applies to developing countries rather the widely used accrual measurement technique from an economic bonding perspective.

Details

Asian Journal of Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 30 September 2022

Wen-Hong Chiu, Zong-Jie Dai, Hui-Ru Chi and Pei-Kuan Lin

This study aims to explore the innovative strategies of business model of the free-to-fee switch, the relationship between the business model innovation and customer…

Abstract

Purpose

This study aims to explore the innovative strategies of business model of the free-to-fee switch, the relationship between the business model innovation and customer knowledge and further develop a conceptual model.

Design/methodology/approach

This study adopts a multiple case study method with abductive research logic, following the replication logic to select samples. A total of eight outstanding companies with altogether 312 free-to-fee switch events were selected from 1998 to 2021.

Findings

A strategic matrix with four innovative business models for the free-to-fee switch is generated. The parallelism between the models and customer knowledge orientations is also found. Further, the study develops the conceptual model regarding customer knowledge orientation as a key mediation.

Research limitations/implications

The study highlights the conceptualization definition of customer knowledge orientation and its mediation effect to the business model innovation of free-to-fee switch, which is a new issue compared with previous research. Furthermore, it reveals that there exists organizational ambidexterity, which brings a new definition of customer knowledge orientation.

Practical implications

This study suggests how to integrate customer knowledge orientations to support the marketing process of the business model of free-to-fee switch. It also proposes a specific mechanism to conduct the free-to-fee switch with the introduction of four innovative strategic models and eight evolutional paths.

Originality/value

This study creatively proposes the strategic matrix and the conceptual model of business model innovation of free-to-fee switch. Moreover, a new conceptual definition of customer knowledge orientation is specified.

Details

Journal of Knowledge Management, vol. 26 no. 11
Type: Research Article
ISSN: 1367-3270

Keywords

Article
Publication date: 7 September 2022

Fei Yan, Hong-Zhuan Chen and Zhichao Zhang

Industry practice has shown that technology licensing has an important effect on the R&D cooperation between firms. Different licensing methods will significantly impact a…

Abstract

Purpose

Industry practice has shown that technology licensing has an important effect on the R&D cooperation between firms. Different licensing methods will significantly impact a supply chain member's cooperative and price R&D decisions. However, there is scant literature investigating the decision on technology licensing and its impact on a supply chain member's price and cooperative R&D decisions. To address this gap, the authors investigate the R&D cooperation and the technology licensing in a supply chain formed of an original equipment manufacturer (OEM), a contract manufacturer (CM), and a third-party manufacturer which will compete with the OEM when the technology licensing occurs.

Design/methodology/approach

The authors investigate two licensing patterns, royalty licensing, fixed fee licensing together with the no licensing, within the R&D cooperative supply chain by developing two three-stage and a two-stage Stackelberg models.

Findings

Compare to the no licensing strategy, technology licensing always benefits to the OEM and the society especially when the technology efficiency and the brand power of the third-party manufacturer are more significant; the royalty licensing benefits to the OEM more when the technology efficiency and the brand power of the third-party manufacturer are higher; the fixed fee licensing benefits to the OEM more when the technology efficiency and the brand power of the third-party manufacturer are lower.

Practical implications

The royalty licensing is more effective for mitigating price competition intensity and helping firms to maintain higher sales margins; the fixed fee licensing induces firms' lower sales margins but increases the firms' sales quantities; in most cases, the fixed fee licensing is optimal from the perspectives of consumer and society, however, the CM's investment intention to the R&D technology with the fixed fee licensing is lower.

Originality/value

So far, different licensing models under the R&D cooperation have not been investigated, and the authors propose two three-stage Stackelberg models with considering the competition caused by technology licensing under the R&D cooperation to deal with the cooperative R&D and technology licensing issues.

Details

Kybernetes, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0368-492X

Keywords

Article
Publication date: 27 February 2014

Daniel A. Nathan and Lauren A. Navarro

– To explain the SEC's focus on the appropriate use of fee-based accounts and disciplinary efforts to identify and prevent “reverse churning.”

Abstract

Purpose

To explain the SEC's focus on the appropriate use of fee-based accounts and disciplinary efforts to identify and prevent “reverse churning.”

Design/methodology/approach

Describes the quantitative analytics used in the SEC's Risk Analysis Examinations (RAEs) to identify reverse churning and other problematic behaviors, explains why the inappropriate use of fee-based or “wrap fee” accounts and “double charging” can be unfair to investment clients, summarizes prior NASD and FINRA guidance and enforcement regarding fee-based account supervision, and recommends account monitoring actions that firms should take to ferret out reverse churning.

Findings

The SEC's continuing interest in reverse churning and double-charging, and its use of new examination and investigation tools, together suggest that the future will see more investigations and enforcement actions against firms who place clients in a fee-based or “wrap-fee” account without having adequate supervisory procedures to determine and monitor whether such accounts are appropriate for those clients.

Practical implications

Monitoring accounts to ferret out reverse churning has proven difficult for firms in the past, since spotting inactivity might be more challenging than detecting excessive trades (known as “churning”). However, it seems that the SEC and its staff are enhancing their ability to identify and address these violations.

Originality/value

Practical advice from experienced financial services lawyers.

Details

Journal of Investment Compliance, vol. 15 no. 1
Type: Research Article
ISSN: 1528-5812

Keywords

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