Hellenic Open University Conferences, International Conference on Business & Economics of the Hellenic Open University 2016

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Audit Fees and Audit Quality during financial crisis
Maria Kyriakou, Augustinos Dimitras

##manager.scheduler.building##: Titania
##manager.scheduler.room##: Socratis
Date: 2016-04-23 11:00 AM – 01:00 PM
Last modified: 2016-05-25

Abstract


The paper aims to examine the relationship between audit fees and audit quality during financial crisis. Recessions are associated with a general slowdown in economic activity leading to a lower Gross Domestic Product (GDP). In this study, we use the growth of GDP as a proxy for financial crisis and the discretionary accruals as a proxy for audit quality. The analysis is focused on German, French, Italian and Spanish companies and the period of study is 2007-2013.

The findings between audit fees and audit quality are mixed. On the one side, the results of the study indicate that there is a positive and statistically significant relation between audit fees and discretionary accruals, suggesting lower audit quality and lack of auditor independence. On the other side, we find that there is a negative and statistically significant relation between audit fees and discretionary accruals, indicating both higher audit quality and auditor independence.

The results provide evidence for both managers and investors.


Keywords


audit fees; audit quality;financial crisis

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