Are Audit Fees Discounted in Initial Year Audit Engagements? Further Evidence From U.S.-Traded Foreign Companies

This paper investigates whether initial-year audit fee discounting occurs in U.S.-traded foreign companies. Using a sample of 5,568 company-years from 2007 to 2018, we find evidence of fee discounting after accounting for measurement bias identified by Barua et al. (2020). Our analysis also suggests that the extent of discounting varies based on regulatory environments and the economic significance of these companies to their auditors, including both audit and nonaudit services. However, we find mixed evidence on whether fee discounting impacts audit quality.