Do Big-Four affiliates earn audit fee premiums in emerging markets? |
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Authors: | Javed Siddiqui Mahbub Zaman Arifur Khan |
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Institution: | 1. Manchester Business School, University of Manchester, Manchester M13 9PL, United Kingdom;2. School of Accounting, Economics and Finance, Deakin University, 221 Burwood Highway, VIC 3125, Australia |
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Abstract: | The paper investigates whether Big-Four affiliated (B4A) firms earn audit premiums in an emerging economy context, using Bangladesh as a case. The joint determination of audit and non-audit service fees is also examined using a sample of 122 companies listed in the Dhaka Stock Exchange. Our findings reveal that although the B4A firms do not generally earn a fee premium in Bangladesh, they charge higher audit fees for clients not purchasing non-audit services. This suggests that the B4A firms may actually lower audit fees to attract non-audit services, and cross subsidizes audit fees through non-audit-services fees. The lack of a B4A premium implies that there is lack of quality audit in emerging markets. We also document that audit and non-audit service fees are jointly determined in Bangladesh. Thus, we provide evidence of joint determination of audit and non-audit service fees in an emerging economy context. |
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Keywords: | Audit fees Non-audit fees Emerging markets Big-4 premium |
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