Cross-Listing Audit Fee Premiums: Theory and Evidence

• 成果类型: Article
• 署名作者: Choi, Jong-Hag; Kim, Jeong-Bon; Liu, Xiaohong; Simunic, Dan A.
• 署名单位: Seoul National University (SNU); Concordia University - Canada; City University of Hong Kong; University of Hong Kong; University of British Columbia
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2009.84.5.1429
• 发表日期: 2009
• 页码: 1429-1463
• 关键词: UNITED-STATES; corporate governance; Investor protection; MARKET-SEGMENTATION; LEGAL LIABILITY; FIRMS; prices

摘要

We study the effects of cross-listings on audit fees. We first develop a model in which legal environments play a crucial role in determining the auditor's legal liability. Our model and analysis predict that auditors charge higher fees for firms that are cross-listed in countries with stronger legal regimes than they do for non-cross-listed firms and that the cross-listing audit fee premium increases with the difference in the strength of legal regimes between the cross-listed foreign country and the home country. We then empirically test these predictions. The results of our cross-country regressions strongly support our predictions. In addition, we find no significant cross-listing fee premium for firms that are cross-listed in countries whose legal regimes are no stronger than those of their home countries. This suggests that cross-listing audit fee premiums are associated with increased legal liability and not with increased audit complexity per se. Our findings help explain why cross-listing premiums occur and what determines their magnitude.