Public Equity and Audit Pricing in the United States

• 成果类型: Article
• 署名作者: Badertscher, Brad; Jorgensen, Bjorn; Katz, Sharon; Kinney, William
• 署名单位: University of Notre Dame; University of London; London School Economics & Political Science; Columbia University; University of Texas System; University of Texas Austin
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12041
• 发表日期: 2014
• 页码: 303-339
• 关键词: Litigation risk; earnings quality; nonaudit services; financial statement; client acceptance; INTERNAL CONTROL; fees; determinants; OWNERSHIP; INDEPENDENCE

摘要

To what degree are audit fees for U.S. firms with publicly traded equity higher than fees for otherwise similar firms with private equity? The answer is potentially important for evaluating regulatory regime design efficiency and for understanding audit demand and production economics. For U.S. firms with publicly traded debt, we hold constant the regulatory regime, including mandated issuer reporting and auditor responsibilities. We vary equity ownership and thus public securities market contextual factors, including any related public firm audit fees from increased audit effort to reduce audit litigation risk and/or pure litigation risk premium (litigation channel effects). In cross-section, we find that audit fees for public equity firms are 20-22% higher than fees for otherwise similar private equity firms. Time-series comparisons for firms that change ownership status yield larger percentage fee increases (decreases) for those going public (private). Results are consistent with litigation channel effects giving rise to substantial incremental audit fees for U.S. firms with public equity ownership.