The effects of non-audit fees on audit fees during the financial crisis

Purpose This study examines the impact of non-audit fees, auditor tenure, and auditor size on audit fees in Germany, France, Italy, and Spain, separately and collectively, for a large sample of non-financial companies during the 2008/2009 global financial crisis. Design/methodology/approach The generalized method of moments (GMM) with interactions is used. Several panel models are used for the in-crisis and pre-crisis periods for the four countries, separately and collectively. Findings The results reveal an important impact of two indicators of crisis on audit fees across the countries investigated. In addition, panel ordinary least squares (OLS) and fixed and random effects models, as well as panel co-integration and panel generalized autoregressive conditional heteroscedasticity (GARCH) models, reveal significant results in the pre-crisis and in-crisis periods for the four countries collectively. Originality/value Previous researchers have not examined the impact of the financial crisis on audit and non-audit fees using GMM, panel co-integration, or bivariate panel GARCH models.