John Weckert and Yeslam Al‐Saggaf
Recently two reports appeared in the press, each of which expressed a very different attitude towards intellectual property. One, in the Australian press, discusses a bill before…
Abstract
Recently two reports appeared in the press, each of which expressed a very different attitude towards intellectual property. One, in the Australian press, discusses a bill before the US House of Representatives that would “give American copyright holders freedom to hack PCs used to illicitly share files over peer‐to‐peer (P2P) networks, without fear of prosecution or litigation”. That this represents a fairly strong view of the importance of intellectual property can be seen further as the report continues.
Details
Keywords
Irina Alexeyeva and Tobias Svanström
The paper aims to investigate audit and non-audit fees during the global financial crisis (GFC) in an environment that is relatively sparsely regulated with regard to the…
Abstract
Purpose
The paper aims to investigate audit and non-audit fees during the global financial crisis (GFC) in an environment that is relatively sparsely regulated with regard to the provision of non-audit services.
Design/methodology/approach
Audit and non-audit fees were studied during pre-GFC (2006-2007), GFC (2008-2009) and post-GFC (2010-2011) periods.
Findings
During the GFC, Swedish companies benefited from an increase in sales and total assets, although return on assets decreased. In this setting, the auditors charged higher audit fees compared with the pre-GFC period, despite the absence of increased audit reporting lags. A significant increase in audit fees continued during the post-crisis periods with auditors paying more attention to companies’ leverage and whether they report losses. At the same time, the companies spent less on non-audit services.
Research limitations/implications
This study is limited to companies from Sweden, which was less affected by the GFC.
Practical implications
GFC auditors are able to charge higher audit fees to public companies including those that are well-performing during financial crises, and they are also able to increase the audit fees in the post-crisis period. This implies that auditors put in extra audit effort to compensate for higher risk, or that they are good at negotiating prices with their clients. However, non-audit fees decreased during the same period, implying that the demand for these services drops under financial instability.
Originality/value
The study highlights auditors’ behavior in the liberal economic environment and it studies both audit fees and non-audit fees before GFC, during GFC and after the GFC. The GFC appears to have provided audit firms the opportunity to extract higher audit fees. Our findings are of interest to managers, auditors and regulators.