[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/now/jnllfa/108.00000040.html
   My bibliography  Save this article

Does Regulating Audit Pricing Enhance Audit Quality and the Timeliness of Audit Reporting? The Texas Experience

Author

Listed:
  • Krishnan, Gopal V.
  • Tanyi, Paul
Abstract
The Texas State Board of Public Accountancy has imposed a statewide ban on lowballing of audit fees. We exploit this unique opportunity to study whether audit quality can be enhanced through regulating audit pricing. We find that audit fees are significantly higher for new clients of Texas-based auditors while audit fees are lower for new clients of auditors outside of Texas. However, we do not find a difference in the actual or perceived audit quality or timeliness of audit reports between new clients of Texas-based auditors and clients in control groups. We also find that clients of Texas-based auditors are less likely to switch auditors than clients of out-of-state auditors, consistent with higher switching costs. Thus, while the statewide ban imposes additional cost on new clients of Texas-based auditors, we do not find any corresponding economic benefits. Our findings have implications for regulators, investors and academics.

Suggested Citation

  • Krishnan, Gopal V. & Tanyi, Paul, 2020. "Does Regulating Audit Pricing Enhance Audit Quality and the Timeliness of Audit Reporting? The Texas Experience," Journal of Law, Finance, and Accounting, now publishers, vol. 5(1), pages 1-64, April.
    • Handle: RePEc:now:jnllfa:108.00000040
    DOI: 10.1561/108.00000040
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1561/108.00000040
    Download Restriction: no
    File URL: https://libkey.io/10.1561/108.00000040?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marioara Molociniuc (Hritcan) & Anatol Melega & Maria Grosu & Mihaela Tulvinschi & Anamaria Geanina Macovei, 2022. "Evolution of scientific research on audit quality reporting in the global economic context," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 10(2), pages 333-350, December.

    More about this item

    Keywords

    Audit fees; Texas; lowballing; misstatements; going concern; audit quality; audit lag;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:now:jnllfa:108.00000040. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lucy Wiseman (email available below). General contact details of provider: http://www.nowpublishers.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.