Are Audit Fees Discounted in Initial Year Audit Engagements? Further Evidence From U.S.-Traded Foreign Companies

This paper investigates whether initial-year audit fee discounting occurs in U.S.-traded foreign companies. Using a sample of 5,568 company-years from 2007 to 2018, we find evidence of fee discounting after accounting for measurement bias identified by Barua et al. (2020). Our analysis also suggests that the extent of discounting varies based on regulatory environments and the economic significance of these companies to their auditors, including both audit and nonaudit services. However, we find mixed evidence on whether fee discounting impacts audit quality.

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Publication Details

Journal
Journal of Accounting Auditing & Finance
Published
2026-02-05
DOI
https://doi.org/10.1177/0148558x261422898
Primary Topic
Auditing, Earnings Management, Governance
Type
article
Field-Weighted Citation Impact
0.00
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article

Are Audit Fees Discounted in Initial Year Audit Engagements? Further Evidence From U.S.-Traded Foreign Companies

Hua‐Wei Huang, Stephanie Hairston, Ting-Chiao Huang
Journal of Accounting Auditing & Finance
Auditing, Earnings Management, Governance
article

Are Audit Fees Discounted in Initial Year Audit Engagements? Further Evidence From U.S.-Traded Foreign Companies

Hua‐Wei Huang, Stephanie Hairston, Ting-Chiao Huang
article en

Abstract

This paper investigates whether initial-year audit fee discounting occurs in U.S.-traded foreign companies. Using a sample of 5,568 company-years from 2007 to 2018, we find evidence of fee discounting after accounting for measurement bias identified by Barua et al. (2020). Our analysis also suggests that the extent of discounting varies based on regulatory environments and the economic significance of these companies to their auditors, including both audit and nonaudit services. However, we find mixed evidence on whether fee discounting impacts audit quality.

Journal of Accounting Auditing & Finance
Georgia Southern University (US), Monash University (AU), National Cheng Kung University (TW)
Partnerships for the goals
Openalex Percentile: Top 66%
Auditing, Earnings Management, Governance
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