Business, Management and Accounting
4 years ago

Audit fees higher for clients involved in bribery, reveals risky business practices.

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Journal of Accounting Research
The Importance of Business Risk in Setting Audit Fees: Evidence from Cases of Client Misconduct
John D. Lyon, Michael Maher

Paper Summary

The study looked at how audit fees are influenced by business risk, specifically focusing on clients in developing countries where bribery is common. The researchers found that companies that disclosed paying bribes had to pay higher audit fees. This suggests that auditors charge more to clients they see as riskier due to factors like bribery.

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