S-WoPEc
 
Scandinavian Working Papers in Economics
HomeAboutSeriesSubject/JEL codesAdvanced Search
Bank of Finland Research Discussion Papers, Bank of Finland

No 13/2013:
The cost of sin: The effect of social norms on audit pricing

Stergios Leventis (), Iftekhar Hasan () and Emmanouil Dedoulis ()

Abstract: In this paper we provide evidence for the effects of social norms on audit pricing by studying companies belonging to the alcohol, firearms, gambling, military, nuclear power, and tobacco industries, which are often described as “sin” companies. We hypothesize that the disparities between “sin” firms operations and prevailing social norms create an adverse context which heightens the client’s business risk assessment by auditors and is, thereby, reflected in the pricing decisions for audit and consulting services. Having controlled for the impact of variables relating to client attributes, auditor attributes and engagement attributes, we demonstrate that audit firms charge significantly higher audit and consulting fees to companies that deviate from prevailing social norms. Additionally, we show that audit pricing levels within the “sin” group depend both on prevailing political views and on the vlevel of “vice” exhibited by “sin” companies.

Keywords: social norms; audit pricing; controversial industries; sin companies; (follow links to similar papers)

JEL-Codes: G21; G30; G34; G38; M41; (follow links to similar papers)

58 pages, August 15, 2013

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

BoF_DP_1313.pdf    PDF-file
Download Statistics
This paper is published as:
Leventis, Stergios, Iftekhar Hasan and Emmanouil Dedoulis, (2013), 'The cost of sin: The effect of social norms on audit pricing', International Review of Financial Analysis, Vol. 29, September, pages 152-165



Questions (including download problems) about the papers in this series should be directed to Minna Nyman ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design by Joachim Ekebom

Handle: RePEc:hhs:bofrdp:2013_013 This page was generated on 2014-12-14 19:21:39