The Pricing of Audit and Non-Audit Services in a Regulated Environment: A Longitudinal Study of the UK Life Insurance Industry

Paul Klumpes, Iliya Komarev & Konstantinos Eleftheriou (2016) The pricing of audit and non-audit services in a regulated environment: a longitudinal study of the UK life insurance industry, Accounting and Business Research, 46:3, 278-302, DOI: 10.1080/00014788.2015.1056719

49 Pages Posted: 15 Mar 2012 Last revised: 1 Dec 2018

See all articles by Paul J. M. Klumpes

Paul J. M. Klumpes

Nottingham Trent University

Iliya Komarev

EMLYON Business School - Casablanca Campus ; Abu Dhabi University - College of Business

Konstantinos Eleftheriou

University of Piraeus

Date Written: October 1, 2013

Abstract

This paper studies the relationship between audit and non-audit service fees in the UK life insurance industry in the period 1999-2009. Moreover, we examine the impact of ownership structure and internal governance on the level of direct audit fees. Utilizing panel data econometric techniques, we find that audit fees are positively (negatively) affected by actuarial (legal service) fees. We conclude that actuarial services generate knowledge spillover, while legal services impair auditor's independence. Our results indicate that the improved corporate governance environment after the Revised Code of 2003 filtered the fundamental nature of different non-audit services. Furthermore, mutual ownership and independent board of directors increase the level of audit fees. Finally, we find evidence for the inter-temporal determination of audit fees.

Keywords: audit fees, non-audit service fees, actuarial services, governance mechanisms, financial institutions

JEL Classification: C23, G22, G32

Suggested Citation

Klumpes, Paul J.M. and Komarev, Iliya and Eleftheriou, Konstantinos, The Pricing of Audit and Non-Audit Services in a Regulated Environment: A Longitudinal Study of the UK Life Insurance Industry (October 1, 2013). Paul Klumpes, Iliya Komarev & Konstantinos Eleftheriou (2016) The pricing of audit and non-audit services in a regulated environment: a longitudinal study of the UK life insurance industry, Accounting and Business Research, 46:3, 278-302, DOI: 10.1080/00014788.2015.1056719 . Available at SSRN: https://ssrn.com/abstract=2021823 or http://dx.doi.org/10.2139/ssrn.2021823

Paul J.M. Klumpes (Contact Author)

Nottingham Trent University ( email )

Burton Street
Nottingham NG1 4BU, NG1 4LN
United Kingdom

Iliya Komarev

EMLYON Business School - Casablanca Campus ( email )

23 Avenue Guy de Collongue
Ecully, 69132
France

Abu Dhabi University - College of Business ( email )

PO Box 59911
Abu Dhabi, Abu Dhabi 59911
United Arab Emirates

Konstantinos Eleftheriou

University of Piraeus ( email )

Department of Economics
Karaoli and Dimitriou 80
Piraeus, ATTIKI 18534
Greece

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