Issues in Examining the Effect of Auditor Litigation on Audit Fees

22 Pages Posted: 12 Jan 2014

See all articles by Miguel Minutti-Meza

Miguel Minutti-Meza

University of Miami - Department of Accounting

Date Written: January 12, 2014

Abstract

A large body of research has studied audit fees aiming to determine whether they reflect auditors’ response to clients’ risks, auditors’ expertise, competitive pressures in the audit market, and independence issues between auditors and clients. Badertscher, Jorgensen, Katz, and Kinney [2014] study the effect of auditor litigation risk on audit fees. Litigation risk is expected to be a strong incentive for auditors to deliver high quality audits and an important determinant of audit fees. Nevertheless, determining the impact of litigation risk is complicated because although there is considerable variation in audit fees, there are scarce opportunities to examine variation in litigation risk. This paper provides a brief summary of extant studies examining the effect of auditor litigation on audit fees, and discusses research design issues and future research opportunities in this area.

Keywords: Auditor litigation, audit fees, matching

JEL Classification: M41, M42, M44

Suggested Citation

Minutti-Meza, Miguel, Issues in Examining the Effect of Auditor Litigation on Audit Fees (January 12, 2014). Journal of Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2378001

Miguel Minutti-Meza (Contact Author)

University of Miami - Department of Accounting ( email )

Coral Gables, FL 33146-6531
United States
305-284-6287 (Phone)

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