The effect of audit firm structure on audit fees : further evidence from New Zealand
Previous research has suggested that audit firm structure can explain a number of variations in audit fee profile. This thesis focuses on the efficiency effects of audit firm structure by examining the external audit fee charged by accounting firms. In response to the conflicting findings of Gist in 1994 and Kaplan et al. in 1990, the relationship between external audit fee and audit firm structure, and the relationship between external audit fee and the interaction between audit firm structure and client environmental stability were investigated. Data for the study was obtained from the annual reports of 74 listed companies in New Zealand Stock Exchange, which were audited by one of the "Big Six" accounting firms. The results indicate a significant relationship between external audit fee and the interaction between the structured audit approach and client environmental stability. The interaction between other audit firm structures (intermediate and unstructured approach) and client environmental stability and external audit fee were not found to be significant. Audit firm structure itself was not found to have a relationship with external audit fee. These results suggest that audit firm structure does not always provide cost advantages. They also provide some support for Kaplan et al.'s explanation of audit firm structure as a means of market differentiation.... [Show full abstract]
Keywordsaudit firm structure; client environmental stability; "Big Six"; external audit fee; New Zealand; audit fee model; auditing; financial performance
Access RightsDigital thesis can be viewed by current staff and students of Lincoln University only. Print copy available for reading in Lincoln University Library. May be available through inter-library loan.
Showing items related by title, author, creator and subject.
Manatunga, Kalinga P. (Lincoln UniversityLincoln, Canterbury, 2003)The widespread criticism and litigation against auditors has frequently been attributed to the existence of an expectations gap between the auditing profession and the public. An audit expectations gap is said to exist ...
An empirical study of the changes in the level of audit fees in New Zealand over a period of 11 years Lee Andy, C. H. (Lincoln University, 1999)Previous studies on this topic have found that audit fees decreased after professional accounting bodies made changes in Codes of Ethics. These changes allowed audit firms to advertise their services, tender for audit ...
The effect of control risk, audit firm size and auditor change on audit fees : an empirical study in New Zealand Yeung, Mo L. (Lincoln University, 1999)Concerns about the rising costs of external audit services in the 1970's prompted a series of research studies in an attempt to provide more understanding of the fee setting process and of the behaviour of the audit market. ...