會計審計論叢 Review of Accounting and Auditing Studies

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RAAS 2024/12
Vol.14 No.2: 133-168

The Effect of the COVID-19 Pandemic on Audit Fee Stickiness

Hsien-Lian Chiu¹, Chia-Chun Hsieh^1*, and Ling-Yu Tsou²
¹Department of Accounting and Information Technology, National Chung Cheng University
²PwC Taiwan

Abstract: COVID-19 not only exacerbated business risks for enterprises but also amplified the audit risks assumed by auditors. Our study used a sample of US-listed companies to examine the effect of the COVID-19 pandemic on the stickiness of audit fees. In contrast to prior research, which demonstrated weaker upward fee stickiness and stronger downward fee stickiness, our results revealed an increase in upward stickiness and a decrease in downward stickiness during the pandemic. This means that audit fees became more resistant to increase and less resistant to decrease. Our results also indicated that the influence of the pandemic on fee stickiness was less pronounced for Big 4 and specialist auditors, suggesting that auditors’ bargaining power mitigates the impact of COVID-19 on fee stickiness. Our study informs audit committees and regulators of the importance of paying attention to audit fee adjustment, as audit fees may not fully respond to increased audit risks imposed by the pandemic due to potential challenges in collecting sufficient and appropriate audit evidence.

Keywords: Audit fee stickiness; COVID-19; Big 4 auditors; Industry specialization

* Corresponding author ; e-mail: cchsieh@ccu.edu.tw

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