Does Mandatory IFRS Adoption Impact Audit Fees? Theory and Evidence

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)32_Refereed conference paper (no ISBN/ISSN)peer-review

View graph of relations

Author(s)

Related Research Unit(s)

Detail(s)

Original languageEnglish
Publication statusPublished - 27 May 2010

Conference

TitleCAAA Annual Conference 2010
PlaceCanada
CityVancouver, BC
Period27 - 29 May 2010

Abstract

This study examines the impact of IFRS adoption on audit fee. We first build an analytical audit fee model to develop empirical hypotheses. We then test our hypotheses using audit fee data from 14 European Union countries that mandated IFRS adoption in 2005. We find that mandatory IFRS adoption has led to an increase in audit fee, which suggests that the increase in audit task complexity associated with IFRS adoption is the driving force for the audit fee change. Furthermore, we find that the IFRS-related audit fee premium increases with the extent of the accounting differences between a country’s former local GAAP and IFRS, decreases with the improvement in financial reporting quality brought about by IFRS adoption, and decreases with the strength of a country’s legal regime. These results provide useful insights into the audit fee effect of IFRS adoption, and how this effect varies with the institutional features of different countries.

Citation Format(s)

Does Mandatory IFRS Adoption Impact Audit Fees? Theory and Evidence. / KIM, Jeong Bon; Liu, Xiaohong; Zheng, Liu.

2010. Paper presented at CAAA Annual Conference 2010, Vancouver, BC, Canada.

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)32_Refereed conference paper (no ISBN/ISSN)peer-review