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To assess the impact of auditor change on audit fees and analyze the implications for auditor independence.

The Effects of Auditor Change on Audit Fees: Tests of Price Cutting and Price Recovery.

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To assess the impact of auditor change on audit fees and analyze the implications for auditor independence.
Analyzed audit fees from 1984 for firms that changed auditors between 1979 and 1984.
Compared changes in fees with a control group of firms that did not change auditors.
Measured the magnitude of fee reductions and subsequent recoveries over four years.
Initial fee reductions averaged 24% in the first year after changing auditors.
Fee reductions continued at an average of 15% in the following two years.
By the fourth year, audit fees returned to normal levels for continuing engagements.

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Finds that changing auditors significantly reduces audit fees initially, suggesting impacts on auditor independence.

Simon et al. (1988) studied this question.

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