Audit Fees and Audit Risk – Evidence from German Speaking Countries

30 Pages Posted: 13 May 2011

See all articles by Erich Pummerer

Erich Pummerer

University of Innsbruck - Department of Accounting, Auditing and Taxation

Julia Severus

University of Innsbruck - Department of Accounting, Auditing and Taxation

Marcel Steller

University of Innsbruck - Department of Accounting, Auditing and Taxation

Date Written: May 6, 2011

Abstract

The objective of this paper is to examine the risk-related premiums of disclosed audit fees in the Austrian and German markets for audit services. The idea of the paper is to determine a risk-free, entity-specific audit fee. By comparing this fee with the disclosed audit fee, we determine risk-related audit fee premiums. In contrast to the previous studies that measured audit risk, we develop an alternative approach based on the differences in volatility of taxable income and GAAP-defined income with respect to earnings management. The results indicate that no relationship between systematic risk and adequate audit fee pricing exists.

Keywords: audit fees, audit risk, audit risk premium

JEL Classification: M40, M42

Suggested Citation

Pummerer, Erich and Severus, Julia and Steller, Marcel, Audit Fees and Audit Risk – Evidence from German Speaking Countries (May 6, 2011). Available at SSRN: https://ssrn.com/abstract=1833404 or http://dx.doi.org/10.2139/ssrn.1833404

Erich Pummerer (Contact Author)

University of Innsbruck - Department of Accounting, Auditing and Taxation ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria
+43/512/507-7264 (Phone)

HOME PAGE: http://www.pummerer.at

Julia Severus

University of Innsbruck - Department of Accounting, Auditing and Taxation ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

Marcel Steller

University of Innsbruck - Department of Accounting, Auditing and Taxation ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria