Cookies

We use cookies to ensure that we give you the best experience on our website. By continuing to browse this repository, you give consent for essential cookies to be used. You can read more about our Privacy and Cookie Policy.


Durham Research Online
You are in:

The impact of religiosity on audit pricing.

Leventis, S. and Dedoulis, E. and Abdelsalam, O. (2015) 'The impact of religiosity on audit pricing.', Journal of business ethics. .

Abstract

Prior literature has demonstrated that religiosity is associated with a reduced acceptance of unethical business practices and financial reporting irregularities. On this premise, we examine whether religiosity, conceptualized as the degree of adherence to religious norms in the geographical area where a firm’s headquarters is located, has an impact on audit firms’ pricing decisions in the US. We measure the intensity of religiosity by the number of adherents relative to the total population in a county and demonstrate that increased religious adherence operates as an institutionalized monitoring mechanism that decreases audit risk and audit costs, which is, in turn, reflected in reduced audit pricing. Additional tests suggest that the impact of religiosity on auditors’ pricing decisions is not differentiated by levels of auditor expertise but that audit fees are determined by an auditor’s relative location in a market sector and religious adherence. We conclude that religious adherence reduces the need for shareholders to bear the costs of monitoring agents, a finding which could be of importance for market participants and regulators.

Item Type:Article
Keywords:Agency costs, Audit fees, Audit pricing, Religiosity.
Full text:(AM) Accepted Manuscript
Download PDF
(1240Kb)
Status:Peer-reviewed
Publisher Web site:https://doi.org/10.1007/s10551-015-3001-x
Publisher statement:The final publication is available at Springer via https://doi.org/10.1007/s10551-015-3001-x
Record Created:13 Jan 2016 14:20
Last Modified:04 Apr 2017 13:43

Social bookmarking: del.icio.usConnoteaBibSonomyCiteULikeFacebookTwitterExport: EndNote, Zotero | BibTex
Look up in GoogleScholar | Find in a UK Library