Abstract
ABSTRACT This study examines how inline XBRL (iXBRL) mandatory adoption impacts audit fees. Although iXBRL can make financial reporting information accessible to a wide range of external stakeholders, the presentation format change should have no impact on audit pricing. However, audit firms note that presenting nonaudited XBRL metadata on top of audited financial statements could lead to an expectation gap where external stakeholders believe that the inline tags have been audited despite no procedures being required. We find that iXBRL adoption is associated with higher audit fees. Upon further examination, we find that the increase in audit fees reflects more of a risk premium being placed on iXBRL clients rather than increased audit effort, as audit quality does not necessarily improve following adoption. We provide timely information on how auditors respond to iXBRL adoption. JEL Classifications: M41; M42; O33.
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