The Geographic Proximity Among Firms, Auditor Office and SEC office and Audit Fees
DOI:
https://doi.org/10.33423/jabe.v26i6.7392Keywords:
business, economics, geography, audit fees, information asymmetryAbstract
This paper investigates the geographic distances among the auditors, audit clients, and the regulatory agency Securities & Exchange Commission (SEC) and their impact on audit quality. Consistent with the exacerbated information asymmetry issue caused by distance, we find the audit quality is negatively associated with the distance between the client/auditor and the SEC offices. We further find that auditors charge higher fees when they are closer to the SEC office, irrespective of the client’s distance to the SEC. This suggests that the distance between auditor and the SEC has a more prominent influence than the client’s location on the audit quality.
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