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Joint Effect of Investor Protection and Securities Regulations on Audit Fees

  • Jaggi, Bikki
  • Low, Pek Yee
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    We document in this study that the institutional factor of securities regulations is positively associated with audit fees in low investor-protection countries. Strict securities regulations in these countries are likely to be associated with higher audit effort and risk, which result in higher audit fees. On the other hand, we do not find any significant association between audit fees and securities regulations in high investor-protection countries. Auditors in these countries generally expend higher audit effort to reduce risk irrespective of the strictness of securities regulations. Consequently, strict securities regulations do not have a significant impact on audit fees in these countries. Our findings suggest that strict securities regulations in weak investor-protection countries play an important role in audit pricing.

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    Article provided by Elsevier in its journal The International Journal of Accounting.

    Volume (Year): 46 (2011)
    Issue (Month): 3 (September)
    Pages: 241-270

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    Handle: RePEc:eee:accoun:v:46:y:2011:i:3:p:241-270
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