Examining the Effects of Audit Fee Pressure on Auditor Objectivity and Report Quality

Posted: Aug 24, 2023

• Hugo Campbell
• Avery Mason
• Chloe Rivera

Abstract

The integrity of financial reporting systems fundamentally depends on auditor objectivity, yet this critical attribute faces persistent threats from economic pressures inherent in client-auditor relationships. While prior research has acknowledged the potential influence of fee-related pressures on auditor independence, the precise mechanisms through which audit fee pressure translates into compromised objectivity remain inadequately understood. Traditional approaches have typically employed linear regression models on archival data or simplified laboratory experiments, failing to capture the complex cognitive and behavioral processes that mediate between economic incentives and professional judgment. This study addresses this gap by introducing a novel computational framework that integrates principles from behavioral economics, cognitive psychology, and machine learning to examine the multi-faceted relationship between audit fee pressure and auditor objectivity.