Local Gambling Norms and Audit Pricing
This study investigates whether local gambling norms are associated with audit pricing. Using a religion-based measure of local social gambling norms, we find strong evidence that public firms located in U.S. counties with more liberal gambling norms exhibit higher levels of audit fees. This result is consistent with our view that, as an important external risk factor, clients’ local gambling norms influence audit pricing decisions. Our findings are robust to a battery of sensitivity tests, including non-religion based measures of liberal gambling norms and a natural experiment.
KeywordsGambling Social norms Audit pricing
JEL ClassificationM14 M42 Z12
We are thankful to the editor, Steven Dellaportas, and two anonymous reviewers of this journal for their helpful and constructive comments. We also wish to thank participants at the 2016 CAAA Annual Conference and 2017 Annual Hawaii International Conference on Arts & Humanities for their remarks.
Compliance with Ethical Standards
Conflict of interest
The authors declare that they have no conflict of interest.
This article does not contain any studies with human participants or animals performed by any of the authors.
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