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Fee pressure and audit quality

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  • Ettredge, Michael
  • Fuerherm, Elizabeth Emeigh
  • Li, Chan

Abstract

This study investigates the association of audit fee pressure with an inverse measure of audit quality, misstatements in audited data, during the recent recession. Fee pressure in a year is measured as the difference between benchmark “normal” audit fees and actual audit fees. We find fee pressure is positively and significantly associated with accounting misstatements in 2008, the center of the recession. Our results suggest that auditors made fee concessions to some clients in 2008, and that fee pressure was associated with reduced audit quality in that year.

Suggested Citation

  • Ettredge, Michael & Fuerherm, Elizabeth Emeigh & Li, Chan, 2014. "Fee pressure and audit quality," Accounting, Organizations and Society, Elsevier, vol. 39(4), pages 247-263.
    • Handle: RePEc:eee:aosoci:v:39:y:2014:i:4:p:247-263
    DOI: 10.1016/j.aos.2014.04.002
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    References listed on IDEAS

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