Climate Risk and the Price of Audit Services: The Case of Drought

Autor:	Mukesh Garg, Cameron Truong, Christofer Adrian
Rok vydání:	2020
Předmět:	Economics and Econometrics 050208 finance business.industry Climate risk fungi 05 social sciences food and beverages Accounting 050201 accounting Audit 0502 economics and business Business Finance
Zdroj:	AUDITING: A Journal of Practice & Theory. 39:167-199
ISSN:	1558-7991 0278-0380
DOI:	10.2308/ajpt-18-097
Popis:	SUMMARY This study examines the impact of drought on the pricing of audit services for U.S. firms over the period 2001–2015. We employ the Palmer Drought Severity Index (PDSI) to determine drought intensity conditions at the state level on a yearly basis and regress audit fees on drought intensity after controlling for other known factors of audit fees. We document that auditors charge significantly higher audit fees for client firms headquartered in areas affected by drought. The effect of drought on audit fees is more pronounced among firms with lower accruals quality and among firms with high business operation concentration in their headquarter states. Collectively, our findings suggest that climate risk in the form of drought not only affects firm risk but also audit risk, thereby highlighting that externalities from climatic conditions are relevant to firms and auditors.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::cf2c2225b2ced7d5e7e4b667d4c7266d https://doi.org/10.2308/ajpt-18-097 Zobrazit plný text záznamu Plný text ve formátu PDF Plný text ve formátu HTML
Nepřihlášeným uživatelům se plný text nezobrazuje	K zobrazení výsledku je třeba se přihlásit.