Audit fees and the salience of financial crisis: evidence from Slovenia

Figures & data

Table

Variable	Predicted direction	Definition
ln audit	independent variable	Natural log of audit fee
ln assets	+	Natural log of total assets
bal_findebt	+	Financial debt / total assets
bal_invrec	+	(Long-term + short-term receivables + inventories) / total assets
bal_ebit	−	EBIT / total assets
dum_loss	+	1 if net loss in year of audit, otherwise 0
dum_bigfour	+	1 if audited by Big 4, otherwise 0
dum_own	−	1 if domestic ownership more than 50%, otherwise 0
dum_crisis	+	1 for years 2009, 2010, 2011 and 2012, otherwise 0

Table 1. Descriptive statistics and share of Big 4 audited companies by year.

Year		Audit fee (EUR)	Assets (in EUR)	bal_findebt	bal_ebit	bal_invrec	Share of Big 4
2007	median	8480	13,000,000	0.250	0.040	0.433	41.14%
2008	median	9260	14,000,000	0.308	0.036	0.423	39.62%
2009	median	9280	14,800,000	0.326	0.024	0.391	37.70%
2010	median	8500	15,300,000	0.322	0.027	0.414	39.80%
2011	median	8500	15,600,000	0.311	0.031	0.402	40.29%
2012	median	8560	15,800,000	0.315	0.027	0.377	39.20%
Total	median	8800	14,800,000	0.301	0.031	0.411	39.71%
Year		Audit fee (EUR)	Assets (in EUR)	bal_findebt	bal_ebit	bal_invrec
2007	mean	12,768	35,700,000	0.258	0.053	0.436
	std. dev.	15,373	89,600,000	0.189	0.090	0.181
2008	mean	13,154	41,000,000	0.306	0.039	0.437
	std. dev.	14,638	106,000,000	0.201	0.116	0.178
2009	mean	13,179	40,600,000	0.327	0.025	0.408
	std. dev.	13,782	104,000,000	0.221	0.092	0.180
2010	mean	13,043	41,900,000	0.328	0.026	0.420
	std. dev.	15,744	108,000,000	0.236	0.117	0.178
2011	mean	12,730	42,100,000	0.324	0.034	0.412
	std. dev.	14,784	109,000,000	0.236	0.090	0.178
2012	mean	12,530	42,000,000	0.322	0.030	0.403
	std. dev.	15,458	112,000,000	0.241	0.084	0.177
Total	mean	12,893	40,400,000	0.309	0.035	0.420
	std. dev.	14,997	104,000,000	0.221	0.099	0.179
Year		Audit fee (EUR)	Assets (in EUR)	bal_findebt	bal_ebit	bal_invrec
2007	min	1180	451,001	0.000	−0.375	0.000
	max	140,000	1,100,000,000	0.929	0.500	1.009
2008	min	1200	2,200,000	0.000	−1.630	0.004
	max	149,000	1,200,000,000	0.960	0.473	1.000
2009	min	800	447,176	0.000	−0.925	0.001
	max	130,000	1,310,000,000	1.403	0.447	0.999
2010	min	980	445,070	0.000	−1.561	0.000
	max	170,195	1,450,000,000	1.867	0.509	0.994
2011	min	800	441,470	0.000	−0.536	0.001
	max	165,089	1,460,000,000	2.312	0.487	0.997
2012	min	800	811,440	0.000	−0.388	0.006
	max	187,142	1,570,000,000	2.539	0.420	0.999
Total	min	800	441,470	0.000	−1.630	0.000
	max	187,142	1,570,000,000	2.539	0.509	1.009

Source: Own calculation.

Figure 1. Audit fee distribution in EUR for Big 4 and other auditors. Source: Own calculation.

Table 2. Robust regression results of ‘ln audit’ by year.

		2007	2008	2009	2010	2011	2012
ln assets	β1	0.451***	0.451***	0.426***	0.428***	0.421***	0.416***
		(0.0206)	(0.0208)	(0.0216)	(0.0204)	(0.0192)	(0.0212)
bal_findebt	β2	−0.373***	−0.359***	−0.0888	−0.0812	−0.0706	−0.211**
		(0.119)	(0.107)	(0.111)	(0.0969)	(0.0929)	(0.0962)
bal_invrec	β3	0.263**	0.240**	0.329***	0.330***	0.409***	0.484***
		(0.120)	(0.117)	(0.124)	(0.122)	(0.115)	(0.123)
bal_ebit	β4	0.458	−0.285	0.198	−0.351*	0.178	−0.420
		(0.280)	(0.193)	(0.282)	(0.204)	(0.282)	(0.316)
dum_loss	β5	0.254***	0.0397	0.130**	0.00367	0.185***	0.0429
		(0.0720)	(0.0574)	(0.0566)	(0.0537)	(0.0547)	(0.0581)
dum_bigfour	β6	0.250***	0.296***	0.307***	0.262***	0.234***	0.243***
		(0.0452)	(0.0456)	(0.0508)	(0.0487)	(0.0445)	(0.0481)
dum_own	β7	−0.189***	−0.243***	−0.264***	−0.306***	−0.302***	−0.295***
		(0.0577)	(0.0511)	(0.0547)	(0.0523)	(0.0489)	(0.0511)
Constant	β0	1.616***	1.748***	2.018***	2.032***	2.055***	2.173***
		(0.357)	(0.359)	(0.373)	(0.356)	(0.336)	(0.371)
Observations		481	419	334	381	389	380
R-squared		0.596	0.663	0.688	0.666	0.669	0.643

Standard errors in parentheses.

^*** p < 0.01.

^** p < 0.05.

^* p < 0.1.

Source: Own calculation.

Table 3. Fixed effects (within) panel regression results of ‘ln audit’.

ln audit		Coefficient	Standard error	t-stat	p-value
ln assets	β1	0.224***	0.031	7.220	0.000
bal_findebt	β2	0.047	0.058	0.810	0.416
bal_invrec	β3	0.075	0.080	0.940	0.347
bal_ebit	β4	−0.126	0.088	−1.430	0.153
dum_loss	β5	−0.016	0.019	−0.840	0.403
dum_bigfour	β6	0.249***	0.034	7.240	0.000
dum_own	β7	−0.100***	0.038	−2.660	0.008
dum_crisis	β8	−0.046***	0.013	−3.630	0.000
constant	β0	5.381***	0.524	10.260	0.000
Observations		2,384

^*** p < 0.01.

^** p < 0.05.

^* p < 0.1.

Hausman test statistics: χ² (8) = 73.83, Prob >> χ² = 0.0000.

Source: Own calculation.