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Auditee religiosity, external monitoring, and the pricing of audit services
Based on prior studies which show that firms headquartered in high religiosity counties exhibit high level of business ethics, this study examines whether these firms are associated with low audit risk, and therefore low audit fees. In investigating this relationship, we draw a distinction between intrinsic and extrinsic religiosity of auditees. Using a sample of 25,872 U.S. observations from 2003 to 2012, we find that intrinsic religiosity of the auditees is associated with low audit fees after controlling for auditee extrinsic religiosity, social capital, firm-specific characteristics, and county-specific characteristics. Furthermore, we find that external monitoring (institutional ownership and leverage) weakens the negative relationship between auditee intrinsic religiosity and audit fees. Finally, we conclude that the effect of auditor religiosity on audit fees is a regional effect that may affect the relationship between audit fees and auditee intrinsic religiosity.
History
Journal
Journal of business ethicsSeason
In PressPagination
1 - 28Publisher
SpringerLocation
Berlin, GermanyPublisher DOI
ISSN
0167-4544eISSN
1573-0697Language
engPublication classification
C1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2016, Springer Science + Business Media DordrechtUsage metrics
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