Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The impact of International Financial Reporting Standards (IFRS) adoption and IFRS renouncement on audit fees: The case of Switzerland

The impact of International Financial Reporting Standards (IFRS) adoption and IFRS renouncement... Several studies have shown that International Financial Reporting Standards (IFRS) adoption is associated with higher audit fees. We provide additional evidence on this issue by analyzing the Swiss context, which is particularly suitable for two reasons. First, it allows a better estimation of the impact of IFRS adoption on audit fees because the choice of accounting standards (IFRS, US generally accepted accounting principles [GAAPs] or Swiss GAAPs) is left to companies. Accordingly, comparisons can be made within the same institutional context. Second, it is also possible to measure the impact of IFRS renouncement on audit fees because Swiss companies following IFRS can switch back to Swiss GAAPs at any time. Based on a hand‐collected database including 1,651 firm‐year observations over 15 years, we show that, with the exception of very large companies, firms using IFRS pay higher audit fees. We also find that firms switching to IFRS incur additional audit fees in the year preceding the change. By contrast, the return to local GAAPs does not result in lower audit fees, which confirms the stickiness of audit fees reported by several prior studies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Auditing Wiley

The impact of International Financial Reporting Standards (IFRS) adoption and IFRS renouncement on audit fees: The case of Switzerland

Loading next page...
 
/lp/wiley/the-impact-of-international-financial-reporting-standards-ifrs-AOyes1cqwX
Publisher
Wiley
Copyright
© 2018 John Wiley & Sons Ltd
ISSN
1090-6738
eISSN
1099-1123
DOI
10.1111/ijau.12139
Publisher site
See Article on Publisher Site

Abstract

Several studies have shown that International Financial Reporting Standards (IFRS) adoption is associated with higher audit fees. We provide additional evidence on this issue by analyzing the Swiss context, which is particularly suitable for two reasons. First, it allows a better estimation of the impact of IFRS adoption on audit fees because the choice of accounting standards (IFRS, US generally accepted accounting principles [GAAPs] or Swiss GAAPs) is left to companies. Accordingly, comparisons can be made within the same institutional context. Second, it is also possible to measure the impact of IFRS renouncement on audit fees because Swiss companies following IFRS can switch back to Swiss GAAPs at any time. Based on a hand‐collected database including 1,651 firm‐year observations over 15 years, we show that, with the exception of very large companies, firms using IFRS pay higher audit fees. We also find that firms switching to IFRS incur additional audit fees in the year preceding the change. By contrast, the return to local GAAPs does not result in lower audit fees, which confirms the stickiness of audit fees reported by several prior studies.

Journal

International Journal of AuditingWiley

Published: Nov 1, 2018

Keywords: ; ; ;

References