Audit Fees and the Large Auditor Premium in the Italian Market

Abstract

The objective of this research is to highlight the determinants of audit fees in the Italian audit market. As described later, Italy is not directly comparable with other countries where these kinds of studies have been conducted. Furthermore, the Big Italian audit firms were condemned by the Italian Antitrust Authority for price fixing in 2000. A fee model for the Italian market is developed. Consistent with previous studies, findings show that the size, the complexity of auditee, and audit risk have an impact on the audit fee paid by Italian clients. Moreover, auditor size is also relevant. After performing further tests, it was found that large auditor premium could be attributed only to KPMG. So although the Italian Antitrust Authority condemned all the Big Six, the results support the idea that these auditors as a group did not accrue a general premium.

The Awareness of External Auditors and the Management of Kuwaiti Listed Companies on Determinants of Audit Fees: An Exploratory Study

“…Companies with complexity require more time and effort than smaller companies, and in turn pay higher fees. The current findings are consistent with the most research done on audit fees determinants (Sandra & Patrick, 1996;Joshi & Al-Bastaki, 2000;Simon & Tylor, 2002;Cameran, 2005;Al-Harshani, 2008;El-Gammal, 2012;Soyemiand & Olowookere, 2013). They found a positive relationship between audit fees and company size and complexity.…”

“…Consistent with prior studies (Langendijk, 1997;Cameran, 2005;Gonthier & Schatt, 2006;Thinggaard & Kiertzner, 2008;El-Gammal, 2012;Hassan & Naser, 2013, Soyemi & Olowookere, 2013, a questionnaire was developed to explore the determinants of audit fees. It consists of two parts: Part 1 consists of questions asking the participants about their filed work; Part 2 contains 25 questions focusing on the factors that determine the audit fees.…”

Determinants of Audit Fees: Evidence from an Emerging Economy

“…The Emirati companies listed on the exchange are divided into 30 financial companies (14 banks and 16 insurance companies) and 30 nonfinancial. Drawing from previous studies on audit fees, financial companies are excluded from the current study since these companies have special nature of activities and they have different fees structure than the nonfinancial companies (Basioudis & Fifi, 2004;Cameran, 2005;Simunic, 1980). Thus, the 2011 annual reports together with the governance reports for all companies listed on ADX were covered in the current study.…”

“…Companies with several subsidiaries are considered to be more complex than companies with few or without subsidiaries. A significant proportion of previous studies observed positive relationship between corporate complexity and audit fees (Simunic, 1980;Brinn et al, 1994;Cameran, 2005;Joshi & Bastaki, 2000;Clatworthy & Peel, 2006;Thinggaard & Kiertzner, 2008;Vermeer et al, 2009;Ellis & Booker, 2011;Verbruggen et al, 2011). The main reasons advanced in the literature to explain such a relationship is that greater number of subordinate financial statements require more audit time and greater expertise to ensure the accuracy of the consolidated financial statements (Sandra & Patrick, 1996).…”

Non-audit Services and Audit Quality: Evidence from Private Firms

“…Firms with financial problems have greater incentives to manipulate earnings (DeFond and Jiambalvo, 1994). Financial distress may further be related to higher audit risk and increased audit procedures (Cameran, 2005). In this context, a variable stating the proportion of own equity, SOLVENCY, and a performance variable, ROA, have been included in the regression models.…”