Title:
Earnings Benchmarks: The Role of Auditor Tenure and Fee Structures

Authors:
Dong Hyun Son, South Korea

Abstract:

The aim of this study investigates whether audit fees and auditor tenure jointly affect the ability of firms to meet or beat earnings expectations. Prior studies provide evidence that non-audit fees are adversely affected by auditor independence when auditor tenure is short. These findings suggest that a positive relationship exists between non-audit fees and earnings management, conditional on short auditor tenure. To expand this line of research, this study tests whether integrated effects of audit fees and auditor tenure are associated with firms’ upward earnings manipulation. Using firm-year observations of Korean-listed firms between 2014 and 2020, the logit analysis shows that firms with shorter auditor-client relationships and higher audit fees are more likely to achieve earnings benchmarks.

DOI: https://doi.org/10.51505/IJEBMR.2025.91019