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Longer term audit costs of IFRS and the differential impact of implied auditor cost structures

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  • Steven Cahan
  • Stephen Higgins
  • David Lont
  • Tom Scott
  • Steven Cahan

Abstract

type="main" xml:id="acfi12190-abs-0001"> Prior literature finds higher audit fees after the adoption of International Financial Reporting Standards (IFRS). We add to this research by documenting that the post-IFRS increase in audit fees is persistent, and not a short-term effect driven by transitional costs. In addition, early adopters have higher audit fees and this difference continues after IFRS adoption. Next, we consider the effect of increased effort required under IFRS on marginal pricing. Our results find lower (higher) marginal pricing post-IFRS for PwC and Deloitte (EY), suggesting that they have a relatively higher (lower) fixed and lower (higher) variable cost structure.

Suggested Citation

  • Steven Cahan & Stephen Higgins & David Lont & Tom Scott & Steven Cahan, 2016. "Longer term audit costs of IFRS and the differential impact of implied auditor cost structures," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(1), pages 165-203, March.
    • Handle: RePEc:bla:acctfi:v:56:y:2016:i:1:p:165-203
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    File URL: http://hdl.handle.net/10.1111/acfi.2016.56.issue-1
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    Cited by:

    1. Michael E. Bradbury & Tom Scott, 2021. "What accounting standards were the cause of enforcement actions following IFRS adoption?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 2247-2268, April.
    2. Mercedes Mareque & Angel Barajas & Francisco Lopez-Corrales, 2018. "The Impact of Union of European Football Associations (UEFA) Financial Fair Play Regulation on Audit Fees: Evidence from Spanish Football," IJFS, MDPI, vol. 6(4), pages 1-20, November.
    3. Minjung Kang & Jung‐wha Lee & Mihye Ha & Moon‐Kyung Cho, 2021. "Impact of IFRS adoption on audit pricing: evidence from audit hours and unit audit price in the Korean audit market," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(2), pages 3517-3564, June.
    4. Stewart Jones & Nurul Alam, 2019. "A machine learning analysis of citation impact among selected Pacific Basin journals," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(4), pages 2509-2552, December.

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