On the persistence and dynamics of Big 4 real audit fees: evidence from the UK

Kacer, Marek, Peel, David A. ORCID: https://orcid.org/0000-0002-7444-390X, Peel, Michael J. ORCID: https://orcid.org/0000-0002-7444-390X and Wilson, Nicholas 2018. On the persistence and dynamics of Big 4 real audit fees: evidence from the UK. Journal of Business Finance and Accounting 45 (5-6) , pp. 714-727. 10.1111/jbfa.12310

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Abstract

Despite the huge audit pricing literature, there is a dearth of evidence on the temporal dynamics of audit fee adjustments and the persistence of audit fees. Based on a sample of 76,867 panel observations for a sample of UK companies audited by the Big 4 over the period 1998 to 2012, we employ consistent lagged dependent variable panel estimators to provide new evidence on the persistence and dynamics of real Big 4 audit fees. Contrary to extant research, which assumes that audit fees adjust immediately in a single period, our empirical results indicate that Big 4 real audit fees are persistent, being partly dependent on their previous realisations. We conclude that static audit fee models omit a potentially important temporal dimension of audit pricing behaviour and that further research is warranted into dynamic audit fee models across other jurisdictions.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Publisher:	Wiley
ISSN:	0306-686X
Date of First Compliant Deposit:	21 December 2017
Date of Acceptance:	18 December 2017
Last Modified:	20 Nov 2024 10:00
URI:	https://orca.cardiff.ac.uk/id/eprint/107732

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