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Impact of IFRS adoption on audit pricing: evidence from audit hours and unit audit price in the Korean audit market

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  • Minjung Kang
  • Jung‐wha Lee
  • Mihye Ha
  • Moon‐Kyung Cho

Abstract

We investigate the impact of IFRS adoption on audit fee components, namely audit hours and unit audit price. We find that IFRS adoption increases audit hours but decreases unit audit price, which indicates audit firms cannot charge extra audit fees for their additional effort in a competitive audit market. Further, the IFRS‐related audit fee increase depends on the client’s bargaining power and audit risk. We thus suggest that the economic burden caused by IFRS adoption cannot be generalised for audit clients, because a competitive audit market imposes an informal limit on audit pricing.

Suggested Citation

  • 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.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:2:p:3517-3564
    DOI: 10.1111/acfi.12711
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