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Local Gambling Norms and Audit Pricing

  • Jeffrey L. Callen
  • Xiaohua Fang
Original Paper

Abstract

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.

Keywords

Gambling Social norms Audit pricing 

JEL Classification

M14 M42 Z12 

Notes

Acknowledgements

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.

Ethical Approval

This article does not contain any studies with human participants or animals performed by any of the authors.

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© Springer Nature B.V. 2018

Authors and Affiliations

  1. 1.Rotman School of ManagementUniversity of TorontoTorontoCanada
  2. 2.College of BusinessFlorida Atlantic UniversityBoca RatonUSA

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