Abstract
SUMMARY Using audit hours and hourly audit fees for a large sample of public and private companies, we examine how auditors respond to auditor business risk. We find that auditors work more hours and charge higher hourly fees when auditing public companies than when auditing private companies. A difference-in-differences time-series comparison of the pre- and post-initial public offering (IPO) periods also indicates that both audit hours and hourly audit fees are higher for the post-IPO period than for the pre-IPO period of the company. This suggests that auditors respond to an increase in auditor business risk by increasing audit effort and charging a risk premium for the residual risk that additional effort alone does not fully address. Data Availability: All data are retrieved from the public sources stated in the paper. JEL Classifications: M4; M42.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
