Audit pricing in a reformed nonprofit market
In contrast to the extant research on audit fees of for-profit companies, literature on nonprofit audit fees is scant. In this paper, audit fee determinants of previous research are tested in a nonprofit market that is characterized by a relatively low dominance of BIG4 auditors, low litigation risk, small nonprofit entities, high levels of subsidization and recent legislative reforms. Using OLS on a sample of nonprofit entities, we find that some known determinants such as auditor size and client complexity hold their ground. However, our findings on client profitability and auditor industry specialization show that refinements of audit fee models need to incorporate audit market characteristics, agency problems and signaling.
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- Quick, Reiner, 2007. "[Rez.] Knechel, W. Robert; Naiker, Vic; Pacheco, Gail: Does Auditor Industry Specialization Matter? Evidence from Market Reaction to Auditor Switches, Auditing: A Journal of Practice & Theory, May 200," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 30560, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
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