Audit fee pressure and audit risk: evidence from the financial crisis of 2008

Catherine Heyjung Sonu, Hyejin Ahn and Ahrum Choi

Asia-Pacific Journal of Accounting & Economics, 2017, vol. 24, issue 1-2, 127-144

Abstract: This paper investigates whether the downward pressure on audit fees during crisis affects the audit fee structure. The empirical results reveal the following: First, audit fees dropped significantly during the financial crisis period. Second, auditors respond differently to small clients and risky clients when facing downward pressure on audit fees. Finally, the above mentioned findings are more pronounced when the client is under high pressure to reduce expenses. Collectively, the above results provide useful insights into how auditors behave when they are under pressure to reduce audit fees.

Date: 2017
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DOI: 10.1080/16081625.2016.1208574

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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