Audit Fees: A Meta-analysis of the Effect of Supply and Demand Attributes*


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    Accepted by Dan Simunic. We appreciate helpful comments from Dan Simunic (associate editor), two anonymous referees, Keith Houghton, Lasse Niemi, faculty and doctoral students at Maastricht University, and participants at the Accounting and Finance Association of Australia and New Zealand Conference, Alice Springs, Australia, and the International Symposium on Audit Research, Singapore. We would also like to thank Kam Kong Chan, Alex Chang, and Jeremy Fong for their assistance with our data collection, and to acknowledge Chris Xu for his help in writing the computer program to carry out the meta-analysis.


We evaluate and summarize the large body of audit fee research and use meta-analysis to test the combined effect of the most commonly used independent variables. The perspective provided by the meta-analysis allows us to reconsider the anomalies, mixed results, and gaps in audit fee research. We find that, although many independent variables have consistent results, several show no clear pattern to the results and others only show significant results in certain periods or particular countries. These variables include a loss by the client and leverage, which have become significant in comparatively recent studies; internal auditing and governance, both of which have mixed results; auditor specialization, regarding which there is still some uncertainty; and the audit opinion, which was a significant variable before 1990 but not in more recent studies.