This study hypothesizes a link between observed audit prices and future reported changes in clients' economic condition. As predicted, results from a traditional audit fee model estimated using a large sample of U.S. public company engagements spanning from 2000 to 2007 reveal a significant...

The pricing of initial audit engagements has long been of interest to regulators because of audit quality concerns speculated to arise with lowball pricing tactics. However, there has been very little empirical investigation specifically aimed at understanding the link between audit fees and...