Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)


The Impact of Cost Stickiness on Audit Pricing

Author(s): Jin Ho Kim

This study investigates the impact of the cost stickiness on audit pricing. The author finds that the company’s asymmetric cost behavior, cost stickiness, is one of the important determinants of the audit pricing. The test results exhibit that firm’s cost stickiness driven by empire building incentives is positively associated with the audit fees, and it has an incremental effect on the audit fees compared to “Future Expectation” group. It implicates that auditors recognize cost stickiness as audit risk, but they price cost stickiness discriminately according to the motives.