Religiosity and Audit Fees

• In Event: Continental Breakfast - Research and Education Forum
  In Roundtable Session: Table 4: Auditor Pricing Studies

Abstract

We document in this study that high religious environment in which auditors and managers operate have a significant impact on audit effort and audit risk, which is reflected in lower audit fees. The results show a significantly negative association between audit fees and religiosity values, especially when both firms’ headquarters and their auditors’ offices are located in the same county. We use both the American Religion Data Archive (ARDA) and Gallup databases for measuring religiosity scores; the main results are based on ARDA data and sensitivity tests are conducted on Gallup data. The results also show that the negative association is especially stronger for firms that are located in rural areas and when firms are concentrated in a geographic location.

Authors

• Hua Xin, Rutgers, The State University of New Jersey, Newark

• Bikki Jaggi, Rutgers, The State University of New Jersey, Newark