Determinants of External Audit Fees: Empirical Evidence from the Audit Market in Kosovo

Keka Vese Qehaja and Hoti Arber ()
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Keka Vese Qehaja: University of Prishtina, Faculty of Economics, Str. Agim Ramadani, p.n., 10,000 Prishtina, Kosovo
Hoti Arber: University of Prishtina, Faculty of Economics, Str. Agim Ramadani, p.n., 10,000 Prishtina, Kosovo

Central European Economic Journal, 2025, vol. 12, issue 59, 219-242

Abstract: This study examines the determinants of external audit fees in Kosovo's evolving audit market, investigating how various client and audit firm characteristics affect pricing in a transitional economy. Drawing on data collected from the Kosovo Council for Financial Reporting (KCFR) and licensed statutory audit firms covering 2019 to 2022, the research applies multiple regression models to explore the relationship between audit fees and key independent variables. The findings demonstrate that larger clients and those with higher complexity incur greater audit fees, underscoring the additional effort and resources required to perform thorough audits. Additionally, the size of the audit firm significantly affects fee levels, with larger firms typically charging more for their services. In contrast, within Kosovo's current regulatory and economic context, client risk and corporate governance show little influence on audit fees. These results suggest that audit firms could benefit from adopting transparent pricing models that reflect client size and complexity, ensuring fairness in fee determination. This study is the first economy-wide study to integrate institutional-void theory with audit-pricing models in a transitional micro-economy, isolating the Law 06/L-032 shock and examining its moderating effect on brand premia. It extends post-2020 debates on digitalisation, inflation, and market concentration to a nascent audit market.

Keywords: audit fees; econometric analysis; audit market (search for similar items in EconPapers)
JEL-codes: M42 M48 M49 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ceuecj:v:12:y:2025:i:59:p:219-242:n:1014

DOI: 10.2478/ceej-2025-0014

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