The Impact of Probability of Default of Banks on Audit Pricing: Evidence from the US Banking Sector

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2016 (EL)
The Impact of Probability of Default of Banks on Audit Pricing: Evidence from the US Banking Sector (EN)

Katichoritis, Ioannis (EN)

School of Economics, Business Administration and Legal Studies, MSc in Banking and Finance (EL)
Sikalidis, Alexandros (EN)
Leventis, Stergios (EN)
Grose, Christos (EN)

This dissertation thesis examines the determinants of audit fees charged on US banks and especially the impact of probability of default of banks on them, by creating a balanced panel set of data, comprising by 122 US banks for a period of thirteen years (2003-2015). In addition, the set is divided into two sub-periods, the pre-crisis period (2003 – 2007) and the post-crisis period (2008 – 2015). The objective of this study is firstly to check if insolvency status of a bank can affect the audit pricing and secondly to examine the world’s financial crisis effect on banks’ audit pricing, by using agency theory and information asymmetry theory as theoretical framework. More specifically, in this analysis, are employed bank-specific variables, such as the probability of default of banks that has not been examined by previous studies, along with the most commonly used auditee and auditor specific characteristics. Results show that the variables being under examination, have the expected effect on audit pricing, besides some exceptions and differentiations between the two sub-periods due to the financial crisis effect. A negative correlation between the relationship of banks’ profitability and audit engagement characteristic risk with the audit fees is indicated. All the rest variables indicate a positive correlation between them and the fees charged. Furthermore, differences on what the auditors considered more significant for pricing the auditing act before and after the crisis are observed. Regarding the insolvency status of bank seems to differentiate before and after the crisis and during the period of 2003 to 2015 there is a statistically significant effect, although it can be considered as weak. (EN)


Probability of Default (EN)
Agency Theory (EN)
Audit Fees (EN)
US Banking Sector (EN)
Credit Scoring Model (EN)

Διεθνές Πανεπιστήμιο της Ελλάδος (EL)
International Hellenic University (EN)



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