Local Gambling Norms and Audit Pricing

Posted: 13 Aug 2018

See all articles by Jeffrey L. Callen

Jeffrey L. Callen

University of Toronto - Rotman School of Management

Xiaohua Fang

Florida Atlantic University

Multiple version iconThere are 2 versions of this paper

Date Written: July 5, 2018

Abstract

This study investigates whether local gambling norms are associated with audit pricing. Using a religion-based measure of social gambling preferences, we find robust evidence that public firms located in U.S. counties with more liberal gambling norms exhibit higher levels of audit fees. This result is consistent with our view that, as an important external risk factor, clients’ local gambling norms influence audit pricing decisions. Our findings are robust to a battery of sensitivity tests including a natural experiment.

Keywords: gambling, social norms, audit pricing

JEL Classification: M14, M42, Z12

Suggested Citation

Callen, Jeffrey L. and Fang, Xiaohua, Local Gambling Norms and Audit Pricing (July 5, 2018). Available at SSRN: https://ssrn.com/abstract=3226496

Jeffrey L. Callen

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-946-5641 (Phone)
416-971-3048 (Fax)

Xiaohua Fang (Contact Author)

Florida Atlantic University ( email )

United States

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