Empirical Studies in Financial Accounting

The impact of monopoly or industry competition on pricing of external audit services

Document Type : Research Paper

Authors

Ali Ebrahimi kordlar
Musa Javani Ghalandari
Kianoosh Ganji
https://doi.org/10.22054/qjma.2020.7792.1276
Abstract
Existing theories predict two contradict relation between industry competitiveness and audit fees. Industry competitiveness reduces the agency problem between manager and stockholder of firms and also increases the accuracy of financial statement. Therefore decrease the assessment of risk by auditors and they are inclined to charge low audit fee for companies operate in competitive industry. On the other hand industry competitiveness can increase the assessment of business risk by auditor, so it would be expected as the competitiveness in the industry rise the audit fee increase, the current study examine empirically "The impact of monopoly or industry competition on pricing of external audit services "with the information of 96 publicly-held companies listed in Tehran Stock Exchange (TSE) Between 2009-2016. The result of study shows the significant and negative relation between audit fee and industry competitiveness. In other words, auditor charge low audit fee for client which operate in high competitive industry.

Keywords

audit fees
industry competitiveness
audit risk
business risk

  • Receive Date 17 December 2015
  • Revise Date 22 January 2017
  • Accept Date 02 September 2020

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