Financial Reporting Transparency and Audit Fees

• In Event: Session C: Auditing

Abstract

We investigate the relationship between corporate reporting transparency and audit fees. We predict that higher quality of information disclosure and better corporate reporting transparency can decrease the information asymmetry between the firms and outsiders, reducing the amount of audit work and lowering the audit risk and the audit fees accordingly. Our findings support our prediction that there is a negative relationship between corporate reporting transparency and audit fees. Our results extend prior studies on benefits of financial reporting transparency and support regulator's efforts to increase the financial reporting transparency.

Authors

• Bo Ouyang, Pennsylvania State University Great Valley

• Li-Chin Jennifer Ho, University of Texas-Arlington

• Andrew J Felo, Nova Southeastern University