TAINAN, Taiwan--(BUSINESS WIRE)--National Cheng Kung University (NCKU) Professor Dr. Hua-Wei Huang, collaborating with Florida International University, USA, has explored the correlation between the auditing fee and the auditing quality, the university revealed.
The study will be published in the July 2015 issue of The Accounting Review.
Professor Huang, who is also the director of NCKU Department of Accountancy has worked together with Professor Jeng-Ren Chiou, Dr. Ting-Chiao Joey Huang and Dr. Kannan Raghunandan from Florida International University to explore audit fee discounting.
Their research paper entitled “Fee discounting and audit quality following audit partner changes: Chinese evidence” offers a new basis for future pricing policies of financial reports disclosures and auditing services.
Using 9,684 observations from China during the years 2002-2011, we find that there is a significant initial year audit fee discount following an audit firm change when both of the signing audit partners are different from the prior year, according to Huang.
He also said that sanctions for problem audits and greater earnings management are more likely when there is an audit firm change that involves two new signing partners together with initial year audit fee discounting.
The auditing quality may affect numerous users of financial reports including shareholders, prospective investors and creditors, since they evaluate a company’s performance mostly based on its financial report, Huang noted.
The research paper is now available on the website of The Accounting Review and will be published in the July 2015 issue of The Accounting Review.
