Auditor Bargaining Power and Audit Fee Lowballing

Authors

  • Shaowen Hua La Salle University
  • Zenghui Liu Western Washington University
  • Xiaojie Christine Sun California State University, Los Angeles
  • Ji Yu State University of New York at New Paltz

Keywords:

Low balling, Bargaining power, Industry Expert Auditor,

Abstract

Incoming auditors usually charge less audit fees to obtain the business (audit fee lowballing). Prior research shows that industry expert auditors have better expertise and resources to perform higher quality audit than the non-expert auditors. Consistent with this literature, we predict and find empirical evidence that the magnitude of lowballing will be significantly smaller for industry expert auditors comparing with non-experts auditors. This result adds new evidence of the impact of auditors’ barging power to the audit fee lowballing literature.   

Author Biographies

Shaowen Hua, La Salle University

Assistant Professor
Department of Accounting
School of Business

Zenghui Liu, Western Washington University

Assistant Professor
Department of Accounting
College of Business and Economics  

Xiaojie Christine Sun, California State University, Los Angeles

Assistant Professor
Department of Accounting
College of Business and Economics  

Ji Yu, State University of New York at New Paltz

Assistant Professor of Accounting
School of Business

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Published

2016-12-31

Issue

Vol. 7 No. 1 (2016)

Section

ABR Journal Articles

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