An International Study of Cross-sectional Variations in Audit Fees

Document Type


Publication Date


Journal / Book Title

International Journal of Auditing


Most previous studies in the market for auditing services and modeling of audit fees have been limited to either a single country (e.g., Johnson et al. 1995) or a single region (e.g., Simon et al. 1992) or a collection across regions (Haskin & Williams 1988). The main studies to examine cross‐country audit fee models are Taylor and Simon (1999) and Wingate (1994). This study extends their previous work by building an audit fees model for 12 countries in Europe, Africa, and Asia. A more comprehensive model is tested which includes the developing stage of the country, (a variable not yet tested) and industry classifications (a variable not tested by most previous studies). Data were compiled from the annual reports published in the International Accounting and Auditing Trends, Fourth Edition (1995) over 1989–1993 by Center for International Financial Analysis and Research (CIFAR).

Our results show that, on average, companies in developed countries pay higher audit fees than companies in developing countries. Companies in manufacturing industries for most of the countries studied have the lowest fees charged to them, as compared to the other four industries, presumably because auditors get more training in auditing manufacturing companies than other companies. As in previous studies, our results show that the Big 6 audit firms charge higher fees than non‐Big 6 auditors. The fee premium may be due to the need for quality‐differentiated audits in the emerging capital markets, or due to the brand name reputation enjoyed by the Big 6.



Journal ISSN / Book ISBN

International Journal of Auditing

Published Citation

Chung, S., Narasimhan, R. (2002). An International Study of Cross-sectional Variations in Audit Fees. International Journal of Auditing, 6 (1), pp. 79-91.