• Register
  • Login
  • Persian

Financial Accounting Knowledge

  1. Home
  2. Examine market competition, audit fee stickiness, and audit quality

Current Issue

By Issue

By Author

By Subject

Author Index

Keyword Index

About Journal

Aims and Scope

Editorial Board

Publication Ethics

Indexing and Abstracting

Related Links

FAQ

Peer Review Process

Journal Metrics

News

Guide for Authors

Terms and Conditions

Forms

Examine market competition, audit fee stickiness, and audit quality

    Author

    • mohsen rashidi

    Assistant Professor, Accounting Department, Lorestan University

,

Document Type : Research Paper

10.30479/jfak.2021.12107.2585
  • Article Information
  • References
  • Download
  • How to cite
  • Statistics
  • Share

Abstract

Purpose:Agency problems arise as a result of conflicts of interest between managers and shareholders. Auditing is seen as an effective way to limit the authority of managers in contractual relationships. The purpose of this paper is to examine the market competition, audit fee stickiness, and audit quality.
Method:The subject of the study was based on the regression model of the combined data. During the period of 2008 to 2018, the data of the 72 companies accepted in the Tehran Stock Exchange were collected and used to test the research hypotheses.
Results: The results show that the competitiveness of the audit services market has a negative and significant relationship with the upward stickiness. The results show that the insignificant relationship between the competition of the audit services market and the downward stickiness. Also, the relationship between upward audit fees stickiness and audit quality is significant. Finally, the results show the insignificant relationship between the downward audit fees stickiness and audit quality.
Conclusion: Based on the results of the study, it can be stated that higher competition leads to a change in the stickiness and thus, the downward price correction rate may reflect the limited bargaining power of the auditors over the clients that leads to a change in audit quality.
Contribution: Clients can bargain with the audit fee, anticipating a downward trend in audit fees. Also, auditors should be aware of the risks and opportunities associated with changes in audit fee factors, as there may be opportunities to increase the fee, reduce the audit work, or delay the fee reduction.

Keywords

  • Audit Fee
  • Audit Quality
  • Fee Stickiness
  • Market Competition
  • XML
  • PDF 1.03 M
  • RIS
  • EndNote
  • Mendeley
  • BibTeX
  • APA
  • MLA
  • HARVARD
  • CHICAGO
  • VANCOUVER
References
Aghaie, M., Etemadi, H., Hassani, H. (2016). Study of the Effect of the Agency Problem on Costs Stickiness. Journal of Financial Accounting Knowledge, 3(3): 117-136. (In Persian)
Anderson, M., R. Banker, and S. Janakiraman. (2003). Are selling, general and administrative costs ‘‘sticky’’? Journal of AccountingResearch 41 (1): 47–63.
Asthana, S, C,. and Boone, J, P. (2012), Abnormal Audit Fee and Audit Quality. AUDITING: A Journal of Practice & Theory: 2012, 31 (3): 1-22.
Asthana, S. C., K. K. Raman, and H. Xu. (2015). U.S.-listed foreign companies’ choice of a U.S.-based versus home country-based Big N principal auditor and the effect on audit fees and earnings quality. Accounting Horizons 29 (3): 631–666.
Ball, L. & Mankiw, N. G. (1994). A Sticky-Price Manifesto, National Bureau of Economic Research, Working paper No. 4677.
Bedrossian, A., and D. Moschos. (1988). Industrial structure, concentration and the speed of price adjustment. The Journal of IndustrialEconomics 36 (4): 459–475.
Bhaduri, A., & Falkinger, J. (1990). Optimal price adjustment under imperfect information, European Economic Review, 34 (9): 41-52.
Brown, S. P. A., and M. K. Yu¨ cel. (2000). Gasoline and crude oil prices: Why the asymmetry? Economic and Financial Review 2000 (Q3):23–29.
Causholli, M., De Martinis, M., Hay, D., & Knechel, W. R. (2010). Audit Markets, Fees and Production: Towards an Integrated View of Empirical Audit Research. Journal of Accounting Literature, 29: 167-215.
Chan, K. H., and D. Wu. (2011). Aggregate quasi rents and auditor independence: Evidence from audit firm mergers in China.Contemporary Accounting Research 28 (1): 175–213.
Chang, H,. Guo, Y,. and Mo, P, L. (2019). Market Competition, Audit Fee Stickiness, and Audit Quality: Evidence from China. AUDITING: A Journal of Practice & Theory: 38(2): 79-99.
Choi, J. H., J. B. Kim, and Y. Zang. (2010). Do abnormally high audit fees impair audit quality? Auditing: A Journal of Practice & Theory, 29 (2): 115–140.
Choi, J. H., J. B. Kim, X. Liu, and D. A. Simunic. (2008). Audit pricing, legal liability regimes, and Big 4 premiums: Theory and crosscountry evidence. Contemporary Accounting Research 25 (1): 55–99.
Coulton, J., G. Livne, A. Pettinicchio, and S. Taylor. (2016). Abnormal Audit Fees and Accounting Quality. Working paper, UNSW Australia, University of Exeter Business School, Bocconi University, and University of Technology, Sydney
De Villiers, C., D. Hay, and Z. Zhang. (2014). Audit fee stickiness. Managerial Auditing Journal 29 (1): 2–26.
Dechow, P., and I. Dichev. (2002). The quality of accruals and earnings: The role of accrual estimation errors. The Accounting Review 77(s-1 Supplement): 35–59.
European Commission. (2010). Green paper: Audit policy: Lessons from the crisis. Brussels: European Commission.
Ferguson, A., C. Lennox, and S. L. Taylor. (2011). Are Audit Fees Sticky? Evidence and Implications. Working paper, University ofTechnology, Sydney.
Hall, S., Walsh, M., & Yates, A. (2000). Are UK companies’ prices sticky?, Oxford Economic Papers, 52(4): 25-46.
Hay, D., & Knechel, W. R. (2010). The Effects of Advertising and Solicitation on Audit Fees. Journal of Accounting and Public Policy, 29(1): 60-81.
Hoitash, R., Markelevich, A, J., and Barragato, C, A. (2007). Auditor Fees and Audit Quality. Managerial Auditing Journal, 22(8): 761-786.
Huang, H., K. Raghunandan, T. C. Huang, and J. R. Chiou. (2015). Fee discounting and audit quality following audit firm and audit partnerchanges: Chinese evidence. The Accounting Review 90 (4): 1517–1546.
Kaplan, S. N., and L. Zingales. (1997). Do investment–cash flow sensitivities provide usefulmeasures of financing constraints? Quarterly Journal of Economics 112 (1): 169–215.
Khodadadi, V., Veisi, S., Cheraghinia, A. (2017). Investigation of the Relationship between Customer-Base Concentration and Audit Fees. Journal of Financial Accounting Knowledge, 4(1): 45-60. (In Persian)
Kinney, Jr., W., and R. Libby. (2002). Discussion of the relation between auditors’ fees for non-audit services and earnings management.The Accounting Review 77 (s-1 Supplement): 107–114.
Kordestani, G., rezazadeh, J., Kazemi Olum, M., Abdi, M. (2018). The Investigation of Audit Market Concentration Impact on Audit Fees and Audit Quality. Journal of Financial Accounting Research, 10(2): 65-84. (In Persian)
Lavoie, M. (2015). Post-Keynesian Economics: New Foundations. Cheltenham, U.K.: Edward Elgar.Ministry of Finance (MOF) and State Administration of Taxation (SAT). 2010. Notice of the Ministry of Finance and the State
Mitra, S., D. Deis, and M. Hossain. (2009). The association between audit fees and reported earnings quality in pre- and post-SarbanesOxley regimes. Review of Accounting and Finance 8 (3): 232–252.
Oladunjoye, O. (2008). Market structure and price adjustment in the U.S. wholesale gasoline markets. Energy Economics 30 (3): 937–961.
Rashidi, M. (2014). Review Audit Fee Stickiness. Accounting and Auditing Review, 21(4): 431-448.(In Persian)
U.S. Senate. (1977). Subcommittee on Reports, Accounting and Management of the Commission on Government Operations. The Accounting Establishment: A Staff Study. Washington DC. Government Printing Office.
Vaez, S, A., RamazanAhmadi, M., Rashidi, M. (2014). The effect of audit fees on audit quality in Companies Listed in Stock Exchange. Journal of Financial Accounting Knowledge, 1(1): 87-107. (In Persian)
Zbaracki, M. J., Ritson, M., Levy, D., Dutta, S., & Bergen, M. (2004). Managerial and customer costs of price adjustment: Direct evidence from industrial markets, Review of Economics and Statistics, 86: 514-533.
    • Article View: 1,247
    • PDF Download: 976
Financial Accounting Knowledge
Volume 8, Issue 2 - Serial Number 29
September 2021
Pages 173-193
Files
  • XML
  • PDF 1.03 M
Share
How to cite
  • RIS
  • EndNote
  • Mendeley
  • BibTeX
  • APA
  • MLA
  • HARVARD
  • CHICAGO
  • VANCOUVER
Statistics
  • Article View: 1,247
  • PDF Download: 976

APA

rashidi, M. (2021). Examine market competition, audit fee stickiness, and audit quality. Financial Accounting Knowledge, 8(2), 173-193. doi: 10.30479/jfak.2021.12107.2585

MLA

rashidi, M. . "Examine market competition, audit fee stickiness, and audit quality", Financial Accounting Knowledge, 8, 2, 2021, 173-193. doi: 10.30479/jfak.2021.12107.2585

HARVARD

rashidi, M. (2021). 'Examine market competition, audit fee stickiness, and audit quality', Financial Accounting Knowledge, 8(2), pp. 173-193. doi: 10.30479/jfak.2021.12107.2585

CHICAGO

M. rashidi, "Examine market competition, audit fee stickiness, and audit quality," Financial Accounting Knowledge, 8 2 (2021): 173-193, doi: 10.30479/jfak.2021.12107.2585

VANCOUVER

rashidi, M. Examine market competition, audit fee stickiness, and audit quality. Financial Accounting Knowledge, 2021; 8(2): 173-193. doi: 10.30479/jfak.2021.12107.2585

  • Home
  • About Journal
  • Editorial Board
  • Submit Manuscript
  • Contact Us
  • Sitemap

News

Financial Accounting Knowledge, is licensed under a Creative Commons Attribution 4.0 International License (CC BY NC) .

 

Newsletter Subscription

Subscribe to the journal newsletter and receive the latest news and updates

© Journal Management System. Powered by Sinaweb