Year Author(s) Object of the Sample Methodology Outcome study 1986 Palmrose To detect whether the 361 firms from Regression The term had LnAssets size has a a questionnaire model a coefficient of .470 auditor’s systematically in the U.S.in which was significant correlation with the 1981. at = .01. Among the α audit fee. Palmrose independent variables, believes that a large the major explanatory sized client requires variable in the pricing more audit procedure, of the audit fee was the symbol by a larger assets. This clients’ audit team. The result is in conformity increased audit effort with the prediction that would push up the the size of the audit audit fee to a higher client is significant level. positively correlated with the audit fee. 1995 Craswell, To investigate whether 1484 companies Regression The auditors of Francis & the audit specialization listed on model complex industries in Taylor premium asked are Australia Stock comparing with other industry-specific. Exchange in general industries 1987 indeed charge a premium. 1996 Sandra & To test whether a 709 firm Regression A significant Patrick company with more observations model correlation exists subsidiaries has more from companies between the number of diversified operations in Hong Kong subsidiaries and the hence requiring more in 1992 and audit fee required hours to complete the 1993 which suggests that the audit. complexity in the audit pricing process is relevant. 2002 To test whether 3666 firm-year Regression UK auditors indeed Gul & auditors will charge a observation of model charge a higher fee Lynn premium for the UK firms which when their non-US potential consequences are listed on the oriented clients have of litigation U.S. stock accessed the American client’s risk. exchanges in market. 1996-1998 2004 Casterella, To prove evidence that Information Regression Compare to Francis, small clients are more from 651 model specialists Lewis, & likely to pay a fee companies was do require a higher Walker premium for industry collected by audit fee, and this is specialists than large questionnaire in only applicable to clients. 2002 smaller companies. For large clients, companies not only do not pay an industry premium, in addition their audit fee is relatively less when comparing with
Year Author(s) Object of the study Sample Methodology Outcome 1986 Palmrose To detect whether the auditor’s size has a systematically correlation with the audit fee. Palmrose believes that a large sized client requires more audit procedure, symbol by a larger audit team. The increased audit effort would push up the audit fee to a higher level. 361 firms from a questionnaire in the U.S.in 1981. Regression model The term LnAssets had a coefficient of .470 which was significant at α = .01. Among the independent variables, the major explanatory variable in the pricing of the audit fee was the clients’ assets. This result is in conformity with the prediction that the size of the audit client is significant positively correlated with the audit fee. 1995 Craswell, Francis & Taylor To investigate whether the audit specialization premium asked are industry-specific. 1484 companies listed on Australia Stock Exchange in 1987 Regression model The auditors of complex industries in comparing with other general industries indeed charge a premium. 1996 Sandra & Patrick To test whether a company with more subsidiaries has more diversified operations hence requiring more hours to complete the audit. 709 firm observations from companies in Hong Kong in 1992 and 1993 Regression model A significant correlation exists between the number of subsidiaries and the audit fee required which suggests that the complexity in the audit pricing process is relevant. 2002 Gul & Lynn To test whether auditors will charge a premium for the potential consequences of client’s litigation risk. 3666 firm-year observation of UK firms which are listed on the U.S. stock exchanges in 1996-1998 Regression model UK auditors indeed charge a higher fee when their non-US oriented clients have accessed the American market. 2004 Casterella, Francis, Lewis, & Walker To prove evidence that small clients are more likely to pay a fee premium for industry specialists than large clients. Information from 651 companies was collected by questionnaire in 2002 Regression model Compare to specialists do require a higher audit fee, and this is only applicable to smaller companies. For large clients, companies not only do not pay an industry premium, in addition their audit fee is relatively less when comparing with