The impact of mandatory IFRS adoption on audit fees : Theory and evidence
Related Research Unit(s)
|Journal / Publication||Accounting Review|
|Publication status||Published - Nov 2012|
|Link to Scopus||https://www.scopus.com/record/display.uri?eid=2-s2.0-84870479652&origin=recordpage|
This study examines the impact of International Financial Reporting Standards (IFRS) adoption on audit fees. We first build an analytical audit fee model to analyze the impact on audit fees for the change in both audit complexity and financial reporting quality brought about by IFRS adoption. We then test the model's predictions using audit fee data from European Union countries that mandated IFRS adoption in 2005. We find that mandatory IFRS adoption has led to an increase in audit fees. We also find that the IFRS-related audit fee premium increases with the increase in audit complexity brought about by IFRS adoption, and decreases with the improvement in financial reporting quality arising from IFRS adoption. Finally, we find some evidence that the IFRS-related audit fee premium is lower in countries with stronger legal regimes. Our results are robust to a variety of sensitivity checks.
- Audit complexity, Audit fees, IFRS adoption, Legal regime, Reporting quality
Accounting Review, Vol. 87, No. 6, 11.2012, p. 2061-2094.
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
Kim, J-B, Liu, X & Zheng, L 2012, 'The impact of mandatory IFRS adoption on audit fees: Theory and evidence', Accounting Review, vol. 87, no. 6, pp. 2061-2094. https://doi.org/10.2308/accr-50223
Kim, J-B., Liu, X., & Zheng, L. (2012). The impact of mandatory IFRS adoption on audit fees: Theory and evidence. Accounting Review, 87(6), 2061-2094. https://doi.org/10.2308/accr-50223
Kim J-B, Liu X, Zheng L. The impact of mandatory IFRS adoption on audit fees: Theory and evidence. Accounting Review. 2012 Nov;87(6):2061-2094. https://doi.org/10.2308/accr-50223