Audit Markets, Fees and Production: Towards an Integrated View of Empirical Audit Research

The purpose of this paper is to integrate research on audit markets, fees and production. We present a model of the components that determine audit fees and production [hours]. We observe that, overall, knowledge is concentrated on certain aspects of the model and it is not well-integrated. In particular, little is known about the labor market for the factors of audit production; and while there is extensive research in audit fees, what is known is often conditional and driven by the context of the studies. Further, and at a more general level, the limited focus of prior research omits certain elements of the audit market and audit production that could influence how audit fee research should be interpreted. The paper develops an integrated view that will help to interpret existing research and guide future researchers. We use the integrated view of audit research to derive some overall conclusions concerning our current understanding of audit markets and to suggest some directions for future research.