DETERMINANTS OF AUDIT FEES: EMPIRICAL EVIDENCES FROM ROMANIAN PUBLIC-INTEREST ENTITIES

In the field of audit pricing, there are a lot of previous research studies, but a significant part of them has focused on the US, New Zeeland and Australia markets and too less have been focused on the emerging markets. This study aims to elaborate an empirical analysis of various determinant factors on audit fees for an emerging market such as Romania. The purpose of this paper is to contribute at identifying some of the most relevant determinants of audit pricing, in the case of Romanian 55 public-interest entities (PIEs) listed at Bucharest Stock Exchange, for 2009-2011 period. In order to test the working hypotheses we have employed panel data methods. Two models were finally used in the analysis that proved to be the most consistent. The difference between the two models consists in the fact that shareholders equity is used once in its natural form (as scale variable) and once as a dummy variable, assessing only if the company has positive or negative shareholders equity. The use of both forms in the same models would have caused serious multicollinearity problems.  The outcomes of panel data analysis highlights that, regardless of the model specified, the same three variables are highly significant in both cases. The findings revealed that audit pricing for Romanian public-interest entities are  significantly influenced by the annual turnover of the company, the number of employees and the importance of the auditor (whether it is a Big4 auditor or not).

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