Earnings management risk and audit pricing: Evidence from big bath accounting
研究了巨额冲销（大额非经常性费用）是否影响审计师的风险评估，导致审计费用上升，发现存在巨额冲销的公司审计费用显著更高，且在公司治理弱、信息不对称严重时关系更强。
Abstract We examine whether big baths (large and non‐recurring charges) affect auditors’ risk assessments and therefore result in higher audit fees. Prior studies have found that there is an asymmetric reaction from auditors on firms’ income‐increasing/decreasing accruals. We argue that auditors’ response to big baths is distinguishable from other types of earnings management as big baths provide incremental information to auditors beyond other earnings manipulation indicators. Our findings show that audit fees are significantly higher for firms with big baths, compared to other firms. We also present evidence that the positive relation between big baths and audit fees is stronger for firms with weaker corporate governance and greater information asymmetry. Overall, our results suggest that auditors expand their audit effort to mitigate the greater audit risk attributable to big baths, which in turn lead to higher audit fees.